Mondelez International, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Mondelēz International, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Mondelēz International, Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of earnings, comprehensive earnings, equity and cash flows for each of the three years in the period ended December 31, 2021, including the related notes and financial statement schedule for each of the three years in the period ended December 31, 2021 listed in the index appearing under Item 15(a) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020 , and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Report of Management on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 73 Table of Contents As described in the Report of Management on Internal Control Over Financial Reporting, management has excluded Hu Master Holdings (“Hu”), Lion/Gemstone Topco Ltd (“Grenade”), and Gourmet Food Holdings Pty Ltd (“Gourmet Food”) from its assessment of internal control over financial reporting as of December 31, 2021 because they were acquired by the Company in purchase business combinations during 2021. We have also excluded Hu, Grenade, and Gourmet Food from our audit of internal control over financial reporting. Hu and Gourmet Food are wholly-owned subsidiaries, and Grenade is a majority-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent 0.2% and 0.5%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Indefinite-Life Intangible Assets Annual Impairment Assessments for Certain Brand Names As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated indefinite-life intangible asset balance was $17.3 billion as of December 31, 2021, which consists principally of brand names. At least annually management assesses indefinite-life intangible assets for impairment and if significant potential impairment risk exists for a specific asset, management quantitatively tests the asset for impairment by comparing its estimated fair value with its carrying value. As disclosed by management, management estimates fair value using several accepted valuation methods, including relief of royalty, excess earnings and excess margin, that utilize estimates of future sales, earnings growth rates, royalty rates and discount rates to determine a brand name’s fair value. The principal considerations for our determination that performing procedures relating to the indefinite-life intangible asset annual impairment assessments for certain brand names is a critical audit matter are (i) the significant judgment by management when developing the fair value of the indefinite-life intangible assets; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimates of future sales, earnings growth rates, royalty rates, and discount rates for certain brand names; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. 74 Table of Contents Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the indefinite-life intangible asset impairment assessments, including controls over the annual valuation of certain brand names. These procedures also included, among others (i) testing management’s process for developing the fair value of the indefinite-life intangible assets; (ii) evaluating the appropriateness of the valuation methods; (iii) testing the completeness and accuracy of underlying data used in the methods; and (iv) evaluating the reasonableness of the significant assumptions used by management related to the estimates of future sales, earnings growth rates, royalty rates, and discount rates. Evaluating management’s significant assumptions related to estimates of future sales and earnings growth rates involved evaluating whether the significant assumptions used by management were reasonable considering (i) the current and past performance of the certain brand names; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s valuation methods and (ii) the reasonableness of the royalty rate and discount rate significant assumptions. /s/ PricewaterhouseCoopers LLP Chicago, Illinois February 4, 2022 We have served as the Company’s auditor since 2001. 75 Table of Contents Mondelēz International, Inc. and Subsidiaries Consolidated Statements of Earnings For the Years Ended December 31 (in millions of U.S. dollars, except per share data) 2021 2020 2019 Net revenues $ 28,720 $ 26,581 $ 25,868 Cost of sales 17,466 16,135 15,531 Gross profit 11,254 10,446 10,337 Selling, general and administrative expenses 6,263 6,098 6,136 Asset impairment and exit costs 212 301 228 Net gain on acquisition and divestitures ( 8 ) — ( 44 ) Amortization of intangible assets 134 194 174 Operating income 4,653 3,853 3,843 Benefit plan non-service income ( 163 ) ( 138 ) ( 60 ) Interest and other expense, net 447 608 456 Earnings before income taxes 4,369 3,383 3,447 Income tax provision ( 1,190 ) ( 1,224 ) ( 2 ) Gain/(loss) on equity method investment transactions 742 989 ( 2 ) Equity method investment net earnings 393 421 501 Net earnings 4,314 3,569 3,944 Noncontrolling interest earnings ( 14 ) ( 14 ) ( 15 ) Net earnings attributable to Mondelēz International $ 4,300 $ 3,555 $ 3,929 Per share data: Basic earnings per share attributable to Mondelēz International $ 3.06 $ 2.48 $ 2.72 Diluted earnings per share attributable to Mondelēz International $ 3.04 $ 2.47 $ 2.69 See accompanying notes to the consolidated financial statements. 76 Table of Contents Mondelēz International, Inc. and Subsidiaries Consolidated Statements of Comprehensive Earnings For the Years Ended December 31 (in millions of U.S. dollars) 2021 2020 2019 Net earnings $ 4,314 $ 3,569 $ 3,944 Other comprehensive earnings/(losses), net of tax: Currency translation adjustment ( 458 ) ( 322 ) 300 Pension and other benefit plans 495 ( 153 ) 133 Derivative cash flow hedges 13 52 ( 45 ) Total other comprehensive earnings/(losses) 50 ( 423 ) 388 Comprehensive earnings 4,364 3,146 4,332 less: Comprehensive earnings/(losses) attributable to noncontrolling interests ( 2 ) 27 13 Comprehensive earnings attributable to Mondelēz International $ 4,366 $ 3,119 $ 4,319 See accompanying notes to the consolidated financial statements. 77 Table of Contents Mondelēz International, Inc. and Subsidiaries Consolidated Balance Sheets, as of December 31 (in millions of U.S. dollars, except share data) 2021 2020 ASSETS Cash and cash equivalents $ 3,546 $ 3,619 Trade receivables (net of allowances of $ 37 at December 31, 2021 and $ 42 at December 31, 2020) 2,337 2,297 Other receivables (net of allowances of $ 49 at December 31, 2021 and $ 42 at December 31, 2020) 851 657 Inventories, net 2,708 2,647 Other current assets 900 759 Total current assets 10,342 9,979 Property, plant and equipment, net 8,658 9,026 Operating lease right of use assets 613 638 Goodwill 21,978 21,895 Intangible assets, net 18,291 18,482 Prepaid pension assets 1,009 672 Deferred income taxes 541 790 Equity method investments 5,289 6,036 Other assets 371 292 TOTAL ASSETS $ 67,092 $ 67,810 LIABILITIES Short-term borrowings $ 216 $ 29 Current portion of long-term debt 1,746 2,741 Accounts payable 6,730 6,209 Accrued marketing 2,097 2,130 Accrued employment costs 822 834 Other current liabilities 2,397 3,216 Total current liabilities 14,008 15,159 Long-term debt 17,550 17,276 Long-term operating lease liabilities 459 470 Deferred income taxes 3,444 3,346 Accrued pension costs 681 1,257 Accrued postretirement health care costs 301 346 Other liabilities 2,326 2,302 TOTAL LIABILITIES 38,769 40,156 Commitments and Contingencies (Note 14) EQUITY Common Stock, no par value ( 5,000,000,000 shares authorized and 1,996,537,778 shares issued at December 31, 2021 and December 31, 2020) — — Additional paid-in capital 32,097 32,070 Retained earnings 30,806 28,402 Accumulated other comprehensive losses ( 10,624 ) ( 10,690 ) Treasury stock, at cost ( 604,907,239 shares at December 31, 2021 and 577,363,557 shares at December 31, 2020) ( 24,010 ) ( 22,204 ) Total Mondelēz International Shareholders’ Equity 28,269 27,578 Noncontrolling interest 54 76 TOTAL EQUITY 28,323 27,654 TOTAL LIABILITIES AND EQUITY $ 67,092 $ 67,810 See accompanying notes to the consolidated financial statements. 78 Table of Contents Mondelēz International, Inc. and Subsidiaries Consolidated Statements of Equity (in millions of U.S. dollars, except per share data) Mondelēz International Shareholders’ Equity Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Earnings/ (Losses) Treasury Stock Non-controlling Interest Total Equity Balances at January 1, 2019 $ — $ 31,961 $ 24,394 $ ( 10,644 ) $ ( 20,185 ) $ 76 $ 25,602 Comprehensive earnings/(losses): Net earnings — — 3,929 — — 15 3,944 Other comprehensive earnings/ (losses), net of income taxes — — — 390 — ( 2 ) 388 Exercise of stock options and issuance of other stock awards — 58 ( 132 ) — 545 — 471 Common Stock repurchased — — — — ( 1,499 ) — ( 1,499 ) Cash dividends declared ($ 1.09 per share) — — ( 1,576 ) — — — ( 1,576 ) Dividends paid on noncontrolling interest and other activities — — — — — ( 13 ) ( 13 ) Balances at December 31, 2019 $ — $ 32,019 $ 26,615 $ ( 10,254 ) $ ( 21,139 ) $ 76 $ 27,317 Comprehensive earnings/(losses): Net earnings — — 3,555 — — 14 3,569 Other comprehensive earnings/ (losses), net of income taxes — — — ( 436 ) — 13 ( 423 ) Exercise of stock options and issuance of other stock awards — 51 ( 59 ) — 336 — 328 Common Stock repurchased — — — — ( 1,401 ) — ( 1,401 ) Cash dividends declared ($ 1.20 per share) — — ( 1,718 ) — — — ( 1,718 ) Dividends paid on noncontrolling interest and other activities — — 9 — — ( 27 ) ( 18 ) Balances at December 31, 2020 $ — $ 32,070 $ 28,402 $ ( 10,690 ) $ ( 22,204 ) $ 76 $ 27,654 Comprehensive earnings/(losses): Net earnings — — 4,300 — — 14 4,314 Other comprehensive earnings/ (losses), net of income taxes — — — 66 — ( 16 ) 50 Exercise of stock options and issuance of other stock awards — 27 ( 34 ) — 290 — 283 Common Stock repurchased — — — — ( 2,096 ) — ( 2,096 ) Cash dividends declared ($ 1.33 per share) — — ( 1,867 ) — — — ( 1,867 ) Dividends paid on noncontrolling interest and other activities — — 5 — — ( 20 ) ( 15 ) Balances at December 31, 2021 $ — $ 32,097 $ 30,806 $ ( 10,624 ) $ ( 24,010 ) $ 54 $ 28,323 See accompanying notes to the consolidated financial statements. 79 Table of Contents Mondelēz International, Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31 (in millions of U.S. dollars) 2021 2020 2019 CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES Net earnings $ 4,314 $ 3,569 $ 3,944 Adjustments to reconcile net earnings to operating cash flows: Depreciation and amortization 1,113 1,116 1,047 Stock-based compensation expense 121 126 135 U.S. tax reform transition tax/(benefit) — — 5 Deferred income tax provision/(benefit) 205 ( 70 ) ( 631 ) Asset impairments and accelerated depreciation 128 136 109 Loss on early extinguishment of debt 110 185 — Net gain on acquisition and divestitures ( 8 ) — ( 44 ) Net (gain)/loss on equity method investment transactions ( 742 ) ( 989 ) 2 Equity method investment net earnings ( 393 ) ( 421 ) ( 501 ) Distributions from equity method investments 172 246 250 Other non-cash items, net ( 230 ) 243 97 Change in assets and liabilities, net of acquisitions and divestitures: Receivables, net ( 197 ) 59 124 Inventories, net ( 170 ) ( 24 ) 31 Accounts payable 702 436 4 Other current assets ( 169 ) ( 207 ) ( 77 ) Other current liabilities ( 502 ) ( 208 ) ( 362 ) Change in pension and postretirement assets and liabilities, net ( 313 ) ( 233 ) ( 168 ) Net cash provided by operating activities 4,141 3,964 3,965 CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES Capital expenditures ( 965 ) ( 863 ) ( 925 ) Acquisitions, net of cash received ( 833 ) ( 1,136 ) ( 284 ) Proceeds from divestitures including equity method investments 1,539 2,489 167 Proceeds from sale of property, plant and equipment and other 233 10 82 Net cash (used in)/provided by investing activities ( 26 ) 500 ( 960 ) CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES Issuances of commercial paper, maturities greater than 90 days — 677 1,306 Repayments of commercial paper, maturities greater than 90 days — ( 1,174 ) ( 2,367 ) Net issuances/(repayments) of other short-term borrowings 194 ( 2,116 ) 524 Long-term debt proceeds 5,921 7,213 3,136 Long-term debt repayments ( 6,247 ) ( 3,878 ) ( 2,677 ) Repurchases of Common Stock ( 2,110 ) ( 1,390 ) ( 1,480 ) Dividends paid ( 1,826 ) ( 1,678 ) ( 1,542 ) Other ( 1 ) 131 313 Net cash used in financing activities ( 4,069 ) ( 2,215 ) ( 2,787 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 143 ) 73 10 Cash, cash equivalents and restricted cash: (Decrease)/increase ( 97 ) 2,322 228 Balance at beginning of period 3,650 1,328 1,100 Balance at end of period $ 3,553 $ 3,650 $ 1,328 Cash paid: Interest $ 426 $ 413 $ 486 Income taxes $ 1,556 $ 1,264 $ 981 See accompanying notes to the consolidated financial statements. 80 Table of Contents Mondelēz International, Inc. and Subsidiaries Notes to Consolidated Financial Statements Note 1. Summary of Significant Accounting Policies Description of Business: Mondelēz International, Inc. was incorporated in 2000 in the Commonwealth of Virginia. Mondelēz International, Inc., through its subsidiaries (collectively “Mondelēz International,” “we,” “us” and “our”), sells food and beverage products to consumers in over 150 countries. Principles of Consolidation: The consolidated financial statements include Mondelēz International, Inc. as well as our wholly owned and majority owned subsidiaries, except our Venezuelan subsidiaries which were deconsolidated in 2015. All intercompany transactions are eliminated. The noncontrolling interest represents the noncontrolling investors’ interests in the results of subsidiaries that we control and consolidate. We account for investments over which we exercise significant influence under the equity method of accounting. Investments over which we do not have significant influence or control are not material and as there is no readily determinable fair value for the equity interests, these investments are carried at cost with changes in the investment recognized to the extent cash is received. Use of Estimates: We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which require us to make estimates and assumptions that affect a number of amounts in our consolidated financial statements. Significant accounting policy elections, estimates and assumptions include, among others, valuation assumptions of goodwill and intangible assets, useful lives of long-lived assets, restructuring program liabilities, marketing program accruals, insurance and self-insurance reserves, pension and benefit plan assumptions and income taxes. We base our estimates on historical experience, expectations of future impacts and other assumptions that we believe are reasonable. Given the uncertainty of the global economic environment and the impact of COVID-19, our estimates could be significantly different than future performance. If actual amounts differ from estimates, we include the updates in our consolidated results of operations in the period the actual amounts become known. Historically, the aggregate differences, if any, between our estimates and actual amounts in any year have not had a material effect on our consolidated financial statements. Our operations and management structure are organized into four operating segments: • Latin America • AMEA • Europe • North America See Note 18, Segment Reporting , for additional information on our segments. Currency Translation and Highly Inflationary Accounting : We translate the results of operations of our subsidiaries from multiple currencies using average exchange rates during each period and translate balance sheet accounts using exchange rates at the end of each period. We record currency translation adjustments as a component of equity (except for highly inflationary currencies) and realized exchange gains and losses on transactions in earnings. Highly inflationary accounting is triggered when a country’s three-year cumulative inflation rate exceeds 100%. It requires the remeasurement of financial statements of subsidiaries in the country, from the functional currency of the subsidiary to our U.S. dollar reporting currency, with currency remeasurement gains or losses recorded in earnings. As discussed below, beginning on July 1, 2018, we began to apply highly inflationary accounting for our operations in Argentina. 81 Table of Contents Argentina. During the second quarter of 2018, primarily based on published estimates that indicated Argentina's three-year cumulative inflation rate exceeded 100%, we concluded that Argentina became a highly inflationary economy for accounting purposes. As of July 1, 2018, we began to apply highly inflationary accounting for our Argentinean subsidiaries and changed their functional currency from the Argentinean peso to the U.S. dollar. On July 1, 2018, both monetary and non-monetary assets and liabilities denominated in Argentinean pesos were remeasured into U.S. dollars using the exchange rate as of the balance sheet date, with remeasurement and other transaction gains and losses recorded in net earnings. As of December 31, 2021, our Argentinean operations had $ 9 million of Argentinean peso denominated net monetary assets. Our Argentinean operations contributed $ 401 million, or 1.4 % of consolidated net revenues in 2021. We recorded a remeasurement loss of $ 13 million in 2021, a remeasurement loss of $ 9 million in 2020 and a remeasurement gain of $ 4 million in 2019 within selling, general and administrative expenses related to the revaluation of the Argentinean peso denominated net monetary position over these periods. Brexit . Following the separation of the United Kingdom from the European Union (“Brexit”) in 2020, a new trade arrangement was reached between the U.K. and E.U. that began on January 1, 2021. The main trade provisions include the continuation of no tariffs or quotas on trade between the U.K. and E.U. subject to prescribed trade terms, including but not limited to meeting product and labeling standards for both the U.K. and E.U. Cross-border trade between the U.K. and E.U. is also subject to new customs regulations, documentation and reviews. To comply with the new requirements, we increased resources in customer service and logistics, in our factories, and on our customs support teams. We adapted our processes and systems for the new and increased number of customs transactions. We continue to closely monitor and manage our inventory levels of imported raw materials, packaging and finished goods in the U.K. We have made investments in resources, systems and processes to meet the new ongoing requirements and we work to mitigate disruptions to our local supply chain and distribution, including those related to the recent transportation labor shortage in the U.K., to reduce the impact on our input and distribution costs. Despite our efforts to control costs, we have seen inflationary cost pressures rise in our U.K. business this year, as we have also experienced in other markets. If the U.K.’s separation from, or new trade arrangements with, the E.U. negatively impact the U.K. economy or result in disagreements on trade terms, delays affecting our supply chain or distribution, disruptions to sales or collections, or further increases in inflationary cost pressures, the impact to our results of operations, financial condition and cash flows could be material. In 2021, we generated 9.3 % of our net revenues in the U.K. Other Countries . Since we sell our products in over 150 countries and have operations in approximately 80 countries, we monitor economic and currency-related risks and seek to take protective measures in response to these exposures. We continue to monitor the ongoing COVID-19 pandemic and related impacts to our `business operations, currencies and net monetary exposures. Since the global onset of COVID-19 in early 2020, most countries in which we do business experienced periods of significant economic uncertainty as well as exchange rate volatility. At this time, except for Argentina which is accounted for as a highly inflationary economy, we do not anticipate any other countries in which we operate to be at risk of becoming highly inflationary economies. Cash, Cash Equivalents and Restricted Cash: Cash and cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less. We also had restricted cash within other current assets of $ 7 million as of December 31, 2021 and $ 31 million as of December 31, 2020. Total cash, cash equivalents and restricted cash was $ 3,553 million as of December 31, 2021 and $ 3,650 million as of December 31, 2020. Allowances for Credit Losses: The allowances for credit losses are recorded against our receivables. They are developed at a country and region level based on historical collection experiences, current economic condition of specific customers and the forecasted economic condition of countries using various factors such as bond default rates and consumption indexes. We write off receivables once it is determined that the receivables are no longer collectible and as allowed by local laws. 82 Table of Contents Changes in allowances for credit losses consisted of: Allowance for Trade Receivables Allowance for Other Current Receivables Allowance for Long-Term Receivables (in millions) Balance at January 1, 2020 $ ( 35 ) $ ( 44 ) $ ( 14 ) Current period provision for expected credit losses ( 10 ) ( 1 ) ( 1 ) Write-offs charged against the allowance 2 2 — Currency 1 1 3 Balance at December 31, 2020 $ ( 42 ) $ ( 42 ) $ ( 12 ) Current period provision for expected credit losses ( 3 ) ( 13 ) — Write-offs charged against the allowance 5 3 2 Currency 3 3 — Balance at December 31, 2021 $ ( 37 ) $ ( 49 ) $ ( 10 ) Transfers of Financial Assets: We account for transfers of financial assets, such as uncommitted revolving non-recourse accounts receivable factoring arrangements, when we have surrendered control over the related assets. Determining whether control has transferred requires an evaluation of relevant legal considerations, an assessment of the nature and extent of our continuing involvement with the assets transferred and any other relevant considerations. We use receivable factoring arrangements periodically when circumstances are favorable to manage liquidity. We have nonrecourse factoring arrangements in which we sell eligible trade receivables primarily to banks in exchange for cash. We may then continue to collect the receivables sold, acting solely as a collecting agent on behalf of the banks. The outstanding principal amount of receivables under these arrangements amounted to $ 761 million as of December 31, 2021, $ 760 million as of December 31, 2020 and $ 760 million as of December 31, 2019. The incremental costs of factoring receivables under these arrangements were approximately $ 10 million in each of the years presented. The proceeds from the sales of receivables are included in cash from operating activities in the consolidated statements of cash flows. Inventories: We record our inventory using the average cost method and record inventory allowances for overstock and obsolete inventory. Long-Lived Assets: Property, plant and equipment are stated at historical cost and depreciated by the straight-line method over the estimated useful lives of the assets with the expense recorded in cost of sales or selling, general and administrative expenses depending on the nature of the long-lived assets. Machinery and equipment are depreciated over periods ranging from 3 to 20 years and buildings and building improvements over periods up to 40 years. We review long-lived assets, including definite-life intangible assets, for realizability on an ongoing basis. Changes in depreciation, generally accelerated depreciation, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change. We also review for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable. In those circumstances, we perform undiscounted operating cash flow analyses to determine if an impairment exists. When testing for asset impairment, we group assets and liabilities at the lowest level for which cash flows are separately identifiable. Any impairment loss is calculated as the excess of the asset’s carrying value over its estimated fair value. Fair value is estimated based on the discounted cash flows for the asset group over the remaining useful life or based on the expected cash proceeds for the asset less costs of disposal. Any significant impairment losses would be recorded within asset impairment and exit costs in the consolidated statements of earnings. Leases: We determine whether a contract is or contains a lease at contract inception. Our policy is to not recognize right-of-use (“ROU”) assets and lease liabilities for short-term operating leases with terms of 12 months or less. Long-term operating lease ROU assets and long-term operating lease liabilities are presented separately and operating lease liabilities payable in the next twelve months are recorded in other current liabilities. Finance lease ROU assets are 83 Table of Contents presented in property, plant and equipment and the related finance lease liabilities are presented in the current portion of long-term debt and long-term debt. Lease ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets are recognized at commencement date at the value of the lease liability, adjusted for any prepayments, lease incentives received and initial direct costs incurred. Lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. The non-recurring fair value measurement is classified as Level 3 as no fair value inputs are observable. As the rate implicit in the lease is not readily determinable in most of our leases, we use our country-specific incremental borrowing rate based on the lease term using information available at commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Many of our leases contain non-lease components (e.g. product costs, common-area or other maintenance costs) that relate to the lease components of the agreement. Non-lease components and the lease components to which they relate are accounted for as a single lease component. Amortization of ROU lease assets is calculated on a straight-line basis over the lease term with the expense recorded in cost of sales or selling, general and administrative expenses depending on the nature of the leased item. Interest expense is recorded over the lease term and is recorded in interest expense (based on a front-loaded interest expense pattern) for finance leases and is recorded in cost of sales or selling, general and administrative expenses (on a straight-line basis) for operating leases. All operating lease cash payments and interest on finance leases are recorded within cash flows from operating activities and all finance lease principal payments are recorded within cash flows from financing activities in the consolidated statements of cash flows. Software Costs: We capitalize certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use. Capitalized software costs are included in property, plant and equipment and amortized on a straight-line basis over the estimated useful lives of the software, which do not exceed seven years . Goodwill and Indefinite-Life Intangible Assets: We test goodwill and indefinite-life intangible assets for impairment on an annual basis on July 1. We assess goodwill impairment risk throughout the year by performing a qualitative review of entity-specific, industry, market and general economic factors affecting our goodwill reporting units. We review our operating segment and reporting unit structure for goodwill testing annually or as significant changes in the organization occur. Annually, we may perform qualitative testing, or depending on factors such as prior-year test results, current year developments, current risk evaluations and other practical considerations, we may elect to do quantitative testing instead. In our quantitative testing, we compare a reporting unit’s estimated fair value with its carrying value. We estimate a reporting unit’s fair value using a discounted cash flow method that incorporates planned growth rates, market-based discount rates and estimates of residual value. In 2021, we performed a quantitative annual test. For our Europe and North America reporting units, we used a market-based, weighted-average cost of capital of 6.4 % to discount the projected cash flows of those operations, and for our Latin America and AMEA reporting units, we used a risk-rated discount rate of 9.4 %. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, industry and economic conditions, and our actual results and conditions may differ over time. If the carrying value of a reporting unit’s net assets exceeds its fair value, we would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value. Annually we assess indefinite-life intangible assets for impairment by performing a qualitative review and assessing events and circumstances that could affect the fair value or carrying value of these intangible assets. If significant potential impairment risk exists for a specific asset, we quantitatively test it for impairment by comparing its estimated fair value with its carrying value. We determine estimated fair value using estimates of future sales, earnings growth rates, royalty rates and discount rates. If the carrying value of the asset exceeds its fair value, we consider the asset impaired and reduce its carrying value to the estimated fair value. We amortize definite-life intangible assets over their estimated useful lives and evaluate them for impairment as we do other long-lived assets. 84 Table of Contents Insurance and Self-Insurance: We use a combination of insurance and self-insurance for a number of risks, including workers’ compensation, general liability, automobile liability, product liability and our obligation for employee healthcare benefits. We estimate the liabilities associated with these risks on an undiscounted basis by evaluating and making judgments about historical claims experience and other actuarial assumptions and the estimated impact on future results. Revenue Recognition: We predominantly sell food and beverage products across several product categories and in all regions as disclosed in Note 18, Segment Reporting . We recognize revenue when control over the products transfers to our customers, which generally occurs upon delivery or shipment of the products. A small percentage of our net revenues relates to the licensing of our intellectual property, predominantly brand and trade names, and we record these revenues when earned within the period of the license term. We account for product shipping, handling and insurance as fulfillment activities with revenues for these activities recorded within net revenue and costs recorded within cost of sales. Any taxes collected on behalf of government authorities are excluded from net revenues. Revenues are recorded net of trade and sales incentives and estimated product returns. Known or expected pricing or revenue adjustments, such as trade discounts, rebates or returns, are estimated at the time of sale. We base these estimates of expected amounts principally on historical utilization and redemption rates. Estimates that affect revenue, such as trade incentives and product returns, are monitored and adjusted each period until the incentives or product returns are realized. Key sales terms, such as pricing and quantities ordered, are established on a frequent basis such that most customer arrangements and related incentives have a one year or shorter duration. As such, we do not capitalize contract inception costs and we capitalize product fulfillment costs in accordance with U.S. GAAP and our inventory policies. We generally do not have any unbilled receivables at the end of a period. Deferred revenues are not material and primarily include customer advance payments typically collected a few days before product delivery, at which time deferred revenues are reclassified and recorded as net revenues. We generally do not receive noncash consideration for the sale of goods nor do we grant payment financing terms greater than one year. Marketing, Advertising and Research and Development: We promote our products with marketing and advertising programs. These programs include, but are not limited to, cooperative advertising, in-store displays and consumer marketing promotions. For interim reporting purposes, advertising, consumer promotion and marketing research expenses are charged to operations as a percentage of volume, based on estimated sales volume and estimated program spending. We do not defer costs on our year-end consolidated balance sheet and all marketing and advertising costs are recorded as an expense in the year incurred. Advertising expense was $ 1,564 million in 2021, $ 1,376 million in 2020 and $ 1,208 million in 2019. We expense product research and development costs as incurred. Research and development expense was $ 347 million in 2021, $ 332 million in 2020 and $ 351 million in 2019. We record marketing and advertising as well as research and development expenses within selling, general and administrative expenses. Stock-based Compensation: Stock-based compensation awarded to employees and non-employee directors is valued at fair value on the grant date. We record stock-based compensation expense over the vesting period, generally three years. Forfeitures are estimated on the grant date for all of our stock-based compensation awards. Employee Benefit Plans: We provide a range of benefits to our current and retired employees including pension benefits, defined contribution plan benefits, postretirement health care benefits and postemployment primarily severance-related benefits depending upon local statutory requirements, employee tenure and service requirements as well as other factors. The cost for these plans is recognized in earnings primarily over the working life of the covered employee. Financial Instruments: We use financial instruments to manage our currency exchange rate, commodity price and interest rate risks. We monitor and manage these exposures as part of our overall risk management program, which focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on our operating results. A principal objective of our risk management strategies is to reduce significant, unanticipated earnings fluctuations that may arise from volatility in currency exchange rates, commodity prices and interest rates, principally through the use of derivative instruments. 85 Table of Contents We use a combination of primarily currency forward contracts, futures, options and swaps; commodity forward contracts, futures and options; and interest rate swaps to manage our exposure to cash flow variability, protect the value of our existing currency assets and liabilities and protect the value of our debt. See Note 10, Financial Instruments, for more information on the types of derivative instruments we use. We record derivative financial instruments on a gross basis in our consolidated balance sheets. The fair value of our asset derivatives is recorded within other current assets and other assets and the fair value of our liability derivatives is recorded within other current liabilities and other liabilities. Non-cash changes in unrealized gains and losses related to our unsettled derivative instruments are classified in the consolidated statements of cash flows in other non-cash items, net, within operating activities. Cash flows related to the settlement of derivative instruments designated as net investment hedges of foreign operations are classified in the consolidated statements of cash flows within investing activities. All other cash flows related to derivative instruments that are designated, and those that are economic hedges, are classified in the same line item as the cash flows of the related hedged item, which is generally within operating activities. Cash flows related to the settlement of all other free-standing derivative instruments are classified within investing activities. Changes in the fair value of a derivative that is designated as a cash flow hedge, to the extent that the hedge is effective, are recorded in accumulated other comprehensive earnings/(losses) and reclassified to earnings when the hedged item affects earnings. Changes in fair value of economic hedges and the ineffective portion of all hedges are recognized in current period earnings. We use non-U.S. dollar denominated debt to hedge a portion of our net investment in non-U.S. operations against adverse movements in exchange rates. Currency movements related to our non-U.S. debt and our net investments in non-U.S. operations, as well as the related deferred taxes, are recorded within currency translation adjustment in accumulated other comprehensive earnings/(losses). In order to qualify for hedge accounting, a specified level of hedging effectiveness between the derivative instrument and the item being hedged must exist at inception and throughout the hedged period. We must also formally document the nature of and relationship between the derivative and the hedged item, as well as our risk management objectives, strategies for undertaking the hedge transaction and method of assessing hedge effectiveness. Additionally, for a hedge of a forecasted transaction, the significant characteristics and expected term of the forecasted transaction must be specifically identified, and it must be probable that the forecasted transaction will occur. If it is no longer probable that the hedged forecasted transaction will occur, we would recognize the gain or loss related to the derivative in earnings. When we use derivatives, we are exposed to credit and market risks. Credit risk exists when a counterparty to a derivative contract might fail to fulfill its performance obligations under the contract. We reduce our credit risk by entering into transactions with counterparties with high quality, investment grade credit ratings, limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties. We also maintain a policy of requiring that all significant, non-exchange traded derivative contracts with a duration of one year or longer are governed by an International Swaps and Derivatives Association master agreement. Market risk exists when the value of a derivative or other financial instrument might be adversely affected by changes in market conditions and commodity prices, currency exchange rates or interest rates. We manage derivative market risk by limiting the types of derivative instruments and derivative strategies we use and the degree of market risk that we plan to hedge through the use of derivative instruments. Commodity derivatives . We are exposed to price risk related to forecasted purchases of certain commodities that we primarily use as raw materials. We enter into commodity forward contracts primarily for wheat, sugar and other sweeteners, soybean and vegetable oils and cocoa. Commodity forward contracts generally are not subject to the accounting requirements for derivative instruments and hedging activities under the normal purchases exception. We also use commodity futures and options to hedge the price of certain input costs, including cocoa, energy costs, sugar and other sweeteners, wheat, packaging, dairy, corn, and soybean and vegetable oils. We also sell commodity futures to unprice future purchase commitments, and we occasionally use related futures to cross-hedge a commodity exposure. We are not a party to leveraged derivatives and, by policy, do not use financial instruments for speculative purposes. Currency exchange derivatives . We use various financial instruments to mitigate our exposure to changes in exchange rates from third-party and intercompany current and forecasted transactions. These instruments may include currency exchange forward contracts, futures, options and swaps. Based on the size and location of our businesses, we use these instruments to hedge our exposure to certain currencies, including the euro, pound sterling, Swiss franc, Canadian dollar and Mexican peso. Any unrealized gains or losses (mark-to-market impacts) 86 Table of Contents and realized gains or losses are recorded in earnings (see Note 10, Financial Instruments , for additional information). Interest rate cash flow and fair value hedges . We manage interest rate volatility by modifying the pricing or maturity characteristics of certain liabilities so that the net impact on expense is not, on a material basis, adversely affected by movements in interest rates. As a result of interest rate fluctuations, hedged fixed-rate liabilities appreciate or depreciate in market value. We expect the effect of this unrealized appreciation or depreciation to be substantially offset by our gains or losses on the derivative instruments that are linked to these hedged liabilities. We use derivative instruments, including interest rate swaps that have indices related to the pricing of specific liabilities as part of our interest rate risk management strategy. As a matter of policy, we do not use highly leveraged derivative instruments for interest rate risk management. We use interest rate swaps to economically convert a portion of our fixed-rate debt into variable-rate debt. Under the interest rate swap contracts, we agree with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts, which is calculated based on an agreed-upon notional amount. We use interest rate swaps to hedge the variability of interest payment cash flows on a portion of our future debt obligations. We also execute cross-currency interest rate swaps to hedge interest payments on newly issued debt denominated in a different currency than the functional currency of the borrowing entity. Substantially all of these derivative instruments are highly effective and qualify for hedge accounting treatment. Hedges of net investments in non-U.S. operations . We have numerous investments outside the United States. The net assets of these subsidiaries are exposed to changes and volatility in currency exchange rates. We use local currency denominated debt to hedge our non-U.S. net investments against adverse movements in exchange rates. We designated our euro, pound sterling, Swiss franc and Canadian dollar-denominated borrowings as a net investment hedge of a portion of our overall international operations. The gains and losses on our net investment in these designated international operations are economically offset by losses and gains on our euro, pound sterling, Swiss franc and Canadian dollar-denominated borrowings. The change in the debt’s value, net of deferred taxes, is recorded in the currency translation adjustment component of accumulated other comprehensive earnings/(losses). We use derivatives instruments such as cross-currency interest rate swaps and forwards to hedge certain investments in our non-U.S. operations against movements in exchange rates. The after-tax gain/(loss) on these net investment hedge contracts is recorded in the cumulative translation adjustment section of other comprehensive income and the pre-tax impacts of the cash flows from these contracts are reported as other investing activities in the consolidated statement of cash flows. Income Taxes: Our provision for income taxes includes amounts payable or refundable for the current year, the effects of deferred taxes and impacts from uncertain tax positions. We recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax basis of our assets and liabilities, operating loss carryforwards and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those differences are expected to reverse. The realization of certain deferred tax assets is dependent on generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. When assessing the need for a valuation allowance, we consider any carryback potential, future reversals of existing taxable temporary differences (including liabilities for unrecognized tax benefits), future taxable income and tax planning strategies. We recognize tax benefits in our financial statements from uncertain tax positions only if it is more likely than not that the tax position will be sustained based on the technical merits of the position. The amount we recognize is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon resolution. Future changes related to the expected resolution of uncertain tax positions could affect tax expense in the period when the change occurs. We monitor for changes in tax laws and reflect the impacts of tax law changes in the period of enactment. When there is refinement to tax law changes in subsequent periods, we account for the new guidance in the period when it becomes known. 87 Table of Contents New Accounting Pronouncements: In October 2021, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) which requires companies to recognize and measure customer contract assets and contract liabilities acquired in a business combination as if the acquiring company originated the related revenue contracts. Prior to adopting this ASU, acquired contract assets and liabilities were measured at fair value. This ASU is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. We are evaluating the timing and effects of adopting this ASU and currently we do not expect this ASU to have a material impact on our consolidated financial statements. In March 2020 and subsequently in January 2021, the FASB issued an ASU to provide optional accounting guidance for a limited period of time to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions to existing accounting requirements for contract modifications and hedge accounting related to transitioning from discontinued reference rates, such as LIBOR, to alternative reference rates, if certain criteria are met. The new accounting requirements can be applied as of the beginning of the interim period including March 12, 2020, or any date thereafter, through December 31, 2022. We expect to adopt this standard in the fourth quarter of 2022. Based on our evaluation of our contracts to date, we do not expect this ASU to have a material impact on our consolidated financial statements. In December 2019, the FASB issued an ASU that removes certain exceptions in accounting for income taxes, improves consistency in application and clarifies existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. On January 1, 2021, we adopted this ASU and it did not have a material impact on our consolidated financial statements. Note 2. Acquisitions and Divestitures On January 3, 2022, we acquired 100 % of equity of Chipita S.A. (“Chipita”), a leading croissants and baked snacks company in the Central and Eastern European markets. The acquisition of Chipita offers a strategic complement to our existing portfolio and advances our strategy to become the global leader in broader snacking. The cash consideration for Chipita totaled € 1.3 billion ($ 1.5 billion) plus the assumption of Chipita’s debt of € 0.4 billion ($ 0.4 billion) totaling the purchase price of € 1.7 billion ($ 1.9 billion). In 2021, we incurred acquisition-related costs of $ 6 million and integration costs of $ 17 million in preparation for the acquisition. On November 1, 2021, we completed the sale of MaxFoods Pty Ltd, an Australian packaged seafood business that we had acquired as part of our acquisition of Gourmet Food Holdings Pty Ltd (“Gourmet Food”). The sales price was $ 57 million Australian dollars ($ 41 million), net of cash divested with the business, and we recorded an immaterial loss on the transaction. The packaged seafood business added incremental net revenues of $ 35 million in 2021 and operating income of $ 5 million during 2021. On April 1, 2021, we acquired Gourmet Food, a leading Australian food company in the premium biscuit and cracker category, for closing cash consideration of approximately $ 450 million Australian dollars ($ 343 million), net of cash received. We are working to complete the valuation and have recorded a preliminary purchase price allocation of $ 41 million to indefinite-lived intangible assets, $ 80 million to definite-lived intangible assets, $ 164 million to goodwill, $ 19 million to property, plant and equipment, $ 18 million to inventory, $ 25 million to accounts receivable, $ 12 million to other assets, $ 5 million to operating right of use assets, $ 3 million to other current assets, $ 19 million to current liabilities and $ 5 million to long-term operating lease liabilities. The acquisition added incremental net revenues of $ 49 million and operating income of $ 7 million during 2021. We incurred acquisition-related costs of $ 7 million in 2021. On March 25, 2021, we acquired a majority interest in Lion/Gemstone Topco Ltd (“Grenade”), a performance nutrition leader in the United Kingdom, for closing cash consideration of £ 188 million ($ 261 million), net of cash received. The acquisition of Grenade expands our position into the premium nutrition market. We are working to complete the valuation and have recorded a preliminary purchase price allocation of $ 82 million to indefinite-lived intangible assets, $ 28 million to definite-lived intangible assets, $ 181 million to goodwill, $ 1 million to property, plant and equipment, $ 11 million to inventory, $ 18 million to accounts receivable, $ 25 million to current liabilities, $ 20 million to deferred tax liabilities and $ 15 million to long-term other liabilities. The acquisition added incremental net revenues of $ 67 million and operating income of $ 6 million during 2021. We incurred acquisition-related costs of $ 2 million in 2021. 88 Table of Contents On January 4, 2021, we acquired the remaining 93 % of equity of Hu Master Holdings (“Hu”), a category leader in premium chocolate in the United States, which provides a strategic complement to our snacking portfolio in North America through growth opportunities in chocolate and other offerings in the well-being category. The initial cash consideration paid was $ 229 million, net of cash received, and we may be required to pay additional contingent consideration. The estimated fair value of the contingent consideration obligation at the acquisition date was $ 132 million and was determined using a Monte Carlo simulation based on forecasted future results. During 2021, based on latest estimates, we recorded a $ 70 million reduction to the liability as recent economic and market conditions related to COVID-19 and supply chain challenges in the U.S. have impacted the pace of growth. This reduction was recorded in selling, general and administrative expenses. As a result of acquiring the remaining equity interest, we consolidated the operations prospectively from the date of acquisition and recorded a pre-tax gain of $ 9 million ($ 7 million after-tax) related to stepping up our previously-held $ 8 million ( 7 %) investment to fair value. We are working to complete the valuation and have recorded a preliminary purchase price allocation of $ 123 million to indefinite-lived intangible assets, $ 51 million to definite-lived intangible assets, $ 202 million to goodwill, $ 1 million to property, plant and equipment, $ 2 million to inventory, $ 4 million to accounts receivable, $ 5 million to current liabilities and $ 132 million to long-term other liabilities. The acquisition added incremental net revenues of $ 38 million and operating income (inclusive of the adjustment to the contingent consideration liability) of $ 44 million during 2021. We incurred acquisition-related costs of $ 9 million in 2021. On April 1, 2020, we acquired a majority interest in Give & Go, a North American leader in fully-finished sweet baked goods and owner of the famous two-bite ® brand of brownies and the Create-A-Treat ® brand, known for cookie and gingerbread house decorating kits. The acquisition of Give & Go provides access to the in-store bakery channel and expands our position in broader snacking. The purchase consideration for Give & Go totaled $ 1,136 million, net of cash received. We have recorded a purchase price allocation of net tangible and intangible assets acquired and liabilities assumed as follows: (in millions) Receivables $ 29 Inventory 38 Other current assets 6 Property, plant and equipment 136 Operating right of use assets 61 Definite-life intangible assets 511 Indefinite-life intangible assets 42 Goodwill 531 Assets acquired $ 1,354 Current liabilities 42 Deferred tax liabilities 92 Long-term operating lease liabilities 56 Long-term debt 6 Long-term other liabilities 19 Total purchase price $ 1,139 Less: cash received 3 Net Cash Paid $ 1,136 Within definite-life intangible assets, we allocated $ 416 million to customer relationships which have an estimated useful life of 17 years. Goodwill arises principally as a result of expansion opportunities and synergies across both new and legacy product categories. None of the goodwill recognized is expected to be deductible for income tax purposes. 89 Table of Contents The fair value for customer relationships at the acquisition date was determined using the multi-period excess earnings method under the income approach. The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs. Significant assumptions used in assessing the fair values of intangible assets include discounted future cash flows, customer attrition rates and discount rates. Through the one-year anniversary of the acquisition, Give & Go added incremental net revenues of $ 106 million and operating income of $ 6 million during 2021. We incurred acquisition-related costs of $ 15 million in 2020. We incurred acquisition integration costs of $ 6 million in 2021 and $ 2 million in 2020. On July 16, 2019, we acquired a majority interest in a U.S. refrigerated nutrition bar company, Perfect Snacks, within our North America segment for $ 284 million cash paid, net of cash received, and expanded our position in broader snacking. During the first quarter of 2020, we finalized the purchase price allocation of $ 31 million to definite-life intangible assets, $ 107 million to indefinite-life intangible assets, $ 150 million to goodwill, $ 1 million to property, plant and equipment, $ 12 million to inventory, $ 8 million to accounts receivable, $ 13 million to current liabilities, $ 3 million to deferred tax liabilities and $ 9 million to other liabilities. Through the one-year anniversary of the acquisition, Perfect Snacks added incremental net revenues of $ 55 million and an immaterial amount of incremental operating income in 2020. On May 28, 2019, we completed the sale of most of our cheese business in the Middle East and Africa to Arla Foods of Denmark. In 2019, we received cash proceeds of $ 161 million and divested $ 19 million of current assets and $ 96 million of non-current assets. During 2019, we recorded a net pre-tax gain of $ 44 million on the sale. The divestiture resulted in year-over-year declines in net revenues of $ 55 million and operating income of $ 9 million during 2020. We incurred divestiture-related costs of $ 4 million in 2020 and $ 6 million in 2019. Note 3. Inventories Inventories consisted of the following: As of December 31, 2021 2020 (in millions) Raw materials $ 770 $ 718 Finished product 2,054 2,059 2,824 2,777 Inventory reserves ( 116 ) ( 130 ) Inventories, net $ 2,708 $ 2,647 Note 4. Property, Plant and Equipment Property, plant and equipment consisted of the following: As of December 31, 2021 2020 (in millions) Land and land improvements $ 379 $ 422 Buildings and building improvements 3,139 3,252 Machinery and equipment 11,842 12,053 Construction in progress 732 628 16,092 16,355 Accumulated depreciation ( 7,434 ) ( 7,329 ) Property, plant and equipment, net $ 8,658 $ 9,026 Capital expenditures as presented on the statement of cash flow were approximately $ 1.0 billion, $ 0.9 billion and $ 0.9 billion for the years ending December 31, 2021, 2020 and 2019 and excluded $ 249 million, $ 275 million and $ 334 million for accrued capital expenditures not yet paid. 90 Table of Contents In connection with our restructuring program, we recorded non-cash property, plant and equipment write-downs (including accelerated depreciation and asset impairments) and losses/(gains) on disposal within asset impairment and exit costs on the consolidated statements of earnings and within the segment results as follows (refer to Note 8, Restructuring Program ): For the Years Ended December 31, 2021 2020 2019 (in millions) Latin America $ 1 $ ( 12 ) $ — AMEA ( 15 ) ( 7 ) ( 2 ) Europe 7 5 46 North America 65 1 5 Corporate — — 1 Total $ 58 $ ( 13 ) $ 50 Note 5. Leases We have operating and finance leases for manufacturing and distribution facilities, vehicles, equipment and office space. Our leases have remaining lease terms of 1 to 18 years, some of which include options to extend the leases for up to 6 years. We assume the majority of our termination options will not be exercised when determining the lease term of our leases. We do not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases, with the exception of some fleet and equipment leases. Some of our leasing arrangements require variable payments that are dependent on usage or output or may vary for other reasons, such as product costs, insurance and tax payments. These variable payment leases are not included in our recorded lease assets and liabilities and are expensed as incurred. Certain leases are tied to a variable index or rate and are included in our lease assets and liabilities based on the indices or rates as of lease commencement. The components of lease costs were as follows: For the Years Ended December 31, 2021 2020 (in millions) Operating lease cost $ 228 $ 236 Finance lease cost: Amortization of right-of-use assets 89 60 Interest on lease liabilities 7 7 Short-term lease cost 29 26 Variable lease cost 506 442 Sublease income ( 6 ) ( 7 ) Total lease cost $ 853 $ 764 91 Table of Contents Supplemental cash flow information related to leases was as follows: For the Years Ended December 31, 2021 2020 (in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ ( 229 ) $ ( 236 ) Operating cash flows from finance leases ( 8 ) ( 7 ) Financing cash flows from finance leases ( 88 ) ( 56 ) Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 186 $ 208 Finance leases 76 180 Supplemental balance sheet information related to leases was as follows: As of December 31, 2021 2020 (in millions) Operating Leases: Operating lease right-of-use assets, net of amortization $ 613 $ 638 Other current liabilities $ 174 $ 190 Long-term operating lease liabilities 459 470 Total operating lease liabilities $ 633 $ 660 Finance Leases: Finance leases, net of amortization (within property, plant and equipment) $ 233 $ 252 Current portion of long-term debt $ 82 $ 74 Long-term debt 157 182 Total finance lease liabilities $ 239 $ 256 Weighted Average Remaining Lease Term Operating leases 6.6 years 6.3 years Finance leases 3.9 years 4.4 years Weighted Average Discount Rate Operating leases 3.3 % 3.2 % Finance leases 2.9 % 3.2 % 92 Table of Contents Maturities of lease liabilities were as follows: As of December 31, 2021 Operating Leases Finance Leases (in millions) Year Ending December 31: 2022 $ 191 $ 87 2023 141 69 2024 96 47 2025 69 25 2026 45 11 Thereafter 186 14 Total future undiscounted lease payments $ 728 $ 253 Less imputed interest ( 95 ) ( 14 ) Total reported lease liability $ 633 $ 239 On October 5, 2021, the Company closed an asset sale-leaseback transaction on a property in New Jersey. The Company received proceeds of approximately $ 142 million, net of selling costs for the property, which had a carrying value of $ 51 million, and resulted in an approximately $ 91 million gain on the sale transaction. The leaseback is accounted for as an operating lease. The leaseback is expected to end in 2023 and has three 90-day renewal options. Note 6. Goodwill and Intangible Assets Goodwill by operating segment was: As of December 31, 2021 2020 (in millions) Latin America $ 674 $ 706 AMEA 3,365 3,250 Europe 7,830 8,038 North America 10,109 9,901 Goodwill $ 21,978 $ 21,895 Intangible assets consisted of the following: As of December 31, 2021 2020 (in millions) Indefinite-life intangible assets $ 17,299 $ 17,492 Definite-life intangible assets 2,991 2,907 20,290 20,399 Accumulated amortization ( 1,999 ) ( 1,917 ) Intangible assets, net $ 18,291 $ 18,482 Indefinite-life intangible assets consist principally of brand names purchased through our acquisitions of Nabisco Holdings Corp., the Spanish and Portuguese operations of United Biscuits, the global LU biscuit business of Groupe Danone S.A. and Cadbury Limited. Definite-life intangible assets consist primarily of trademarks, customer-related intangibles, process technology, licenses and non-compete agreements. 93 Table of Contents Amortization expense for intangible assets was $ 134 million in 2021, $ 194 million in 2020 and $ 174 million in 2019. For the next five years, we estimate annual amortization expense of approximately $ 125 million in years one to three, approximately $ 100 million in year four and approximately $ 60 million in year five, reflecting December 31, 2021 exchange rates. Changes in goodwill and intangible assets consisted of: 2021 2020 Goodwill Intangible Assets, at cost Goodwill Intangible Assets, at cost (in millions) Balance at January 1 $ 21,895 $ 20,399 $ 20,848 $ 19,670 Changes due to: Currency ( 464 ) ( 465 ) 516 320 Divestitures — ( 17 ) — — Acquisitions 547 405 531 553 Asset impairments — ( 32 ) — ( 144 ) Balance at December 31 $ 21,978 $ 20,290 $ 21,895 $ 20,399 Changes to goodwill and intangibles were: • Divestitures – During the fourth quarter of 2021, we completed the sale of MaxFoods Pty Ltd, an Australian packaged seafood business that we had acquired as part of our acquisition of Gourmet Food, resulting in a decrease in intangible assets of $ 17 million. See Note 2, Acquisitions and Divestitures , for additional information. • Acquisitions – In connection with our 2021 acquisitions of Gourmet Food, Grenade and the remaining interest in Hu, we recorded preliminary purchase price allocations totaling $ 547 million of goodwill and $ 405 million of intangible assets. In connection with our 2020 acquisition of a majority interest in Give & Go, we recorded a purchase price allocation of $ 531 million to goodwill and $ 553 million to intangible assets. See Note 2, Acquisitions and Divestitures , for additional information. • Asset impairments – As further discussed below, we recorded $ 32 million of intangible asset impairments in 2021 and $ 144 million in 2020. In 2021, 2020 and 2019, there were no goodwill impairments and each of our reporting units had sufficient fair value in excess of its carrying value. While all reporting units passed our annual impairment testing, if planned business performance expectations are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then the estimated fair values of a reporting unit or reporting units might decline and lead to a goodwill impairment in the future. In 2021, we recorded $ 32 million of intangible asset impairment charges related to one biscuit brand in North America. We also identified eight brands with $ 1,146 million of aggregate book value as of December 31, 2021 that each had a fair value in excess of book value of 10% or less. We continue to monitor our brand performance, particularly in light of the significant uncertainty due to the COVID-19 pandemic and related impacts to our business. If a brand's earnings expectations, including the timing of the expected recovery from the COVID-19 pandemic impacts, are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then a brand or brands could become impaired in the future. In 2020, we recorded $ 144 million of impairment charges for gum, chocolate, biscuits and candy brands of $ 83 million in North America, $ 53 million in Europe, $ 5 million in AMEA and $ 3 million in Latin America. In 2019, we recorded $ 57 million of impairment charges for gum, chocolate, biscuits and candy brands of $ 39 million in Europe, $ 15 million in AMEA and $ 3 million in Latin America. 94 Table of Contents Note 7. Equity Method Investments Equity method investments consist of our investments in entities in which we maintain an equity ownership interest and apply the equity method of accounting due to our ability to exert significant influence over decisions relating to their operating and financial affairs. Revenue and expenses of our equity method investees are not consolidated into our financial statements; rather, our proportionate share of the earnings of each investee is reflected as equity method investment net earnings. The carrying values of our equity method investments are also impacted by our proportionate share of items impacting the investee's accumulated other comprehensive income or losses and other items, such as our share of investee dividends. Our equity method investments include, but are not limited to, our ownership interests in JDE Peet’s (Euronext Amsterdam: “JDEP”), Keurig Dr Pepper Inc. (Nasdaq: “KDP”), Dong Suh Foods Corporation and Dong Suh Oil & Fats Co. Ltd. As of December 31, 2021, we owned 22.8 %, 5.3 %, 50.0 % and 49.0 %, respectively, of these companies' outstanding shares. Our investments accounted for under the equity method of accounting totaled $ 5,289 million as of December 31, 2021 and $ 6,036 million as of December 31, 2020. We recorded equity earnings and cash dividends of $ 393 million and $ 172 million in 2021, equity earnings and cash dividends of $ 421 million and $ 246 million in 2020 and equity earnings and cash dividends of $ 501 million and $ 250 million in 2019. Based on the quoted closing prices as of December 31, 2021, the combined fair value of our publicly-traded investments in JDEP and KDP was $ 6.3 billion, and for each investment, its fair value exceeded its carrying value. JDE / Keurig Exchange: On March 7, 2016, we exchanged a portion of our 43.5 % JDE equity interest for a new equity interest in Keurig Green Mountain, Inc. (“Keurig”). Following the transaction, our JDE equity interest became 26.5 % and our new Keurig equity interest was 24.2 %. During 2016, we recorded the difference between the $ 2.0 billion fair value of Keurig and our basis in the exchanged JDE shares as a gain of $ 43 million. During 2019, we determined an adjustment to accumulated other comprehensive losses related to our JDE investment was required, which reduced our previously reported gain by $ 29 million. We recorded the adjustment as a loss on equity method transactions. Keurig Dr Pepper Transactions: On August 2, 2021, we sold approximately 14.7 million shares of KDP, which reduced our ownership interest by 1 % to 5.3 % of the total outstanding shares. We received $ 500 million of proceeds and recorded a pre-tax gain of $ 248 million (or $ 189 million after-tax) during the third quarter of 2021. As we continue to have significant influence, we continue to account for our investment in KDP under the equity method, resulting in recognizing our share of their earnings within our earnings and our share of their dividends within our cash flows. We continue to have board representation with one director on the KDP Board of Directors and we retained certain additional governance rights. On June 7, 2021, we participated in a secondary offering of KDP shares and sold approximately 28.0 million shares, which reduced our ownership interest by 2 % to 6.4 % of the total outstanding shares. We received $ 997 million of proceeds and recorded a pre-tax gain of $ 520 million (or $ 392 million after-tax) during the second quarter of 2021. On November 17, 2020, we participated in a secondary offering of KDP shares and sold approximately 40.0 million shares, which reduced our ownership interest by 2.8 % to 8.4 % of the total outstanding shares. We received $ 1,132 million of proceeds and recorded a pre-tax gain of $ 459 million (or $ 350 million after-tax) during the fourth quarter of 2020. On September 9, 2020, we sold approximately 12.5 million shares of KDP, which reduced our ownership interest by 0.9 % to 11.2 % of the total outstanding shares. We received $ 363 million of proceeds and recorded a pre-tax gain of $ 154 million (or $ 119 million after-tax) during the third quarter of 2020. On August 3, 2020, we sold approximately 14.1 million shares of KDP, which reduced our ownership interest by 1.0 % to 12.1 % of the total outstanding shares. We received $ 414 million of proceeds and recorded a pre-tax gain of $ 181 million (or $ 139 million after-tax) during the third quarter of 2020. 95 Table of Contents On March 4, 2020, we participated in a secondary offering of KDP shares and sold approximately 6.8 million shares, which reduced our ownership interest by 0.5 % to 13.1 % of the total outstanding shares. We received $ 185 million of proceeds and recorded a pre-tax gain of $ 71 million (or $ 54 million after-tax) during the first quarter of 2020. During 2019, we recognized a pre-tax gain of $ 23 million (or $ 18 million after-tax) related to the impact of a KDP acquisition that decreased our ownership interest from 13.8 % to 13.6 %. JDE Peet’s Transaction: In May 2020, JDE Peet’s B.V. (renamed JDE Peet’s N.V. immediately prior to Settlement (as defined below), “JDE Peet’s”) consummated the offering, listing and trading of its ordinary shares on Euronext Amsterdam, a regulated market operated by Euronext Amsterdam N.V. In connection with this transaction, JDE Peet’s and the selling shareholders, including us, agreed to sell at a price of € 31.50 per ordinary share a total of approximately 82.1 million ordinary shares, including ordinary shares subject to an over-allotment option. The ordinary shares were listed and first traded on May 29, 2020, and payment for, and delivery of, the ordinary shares sold in the offering (excluding ordinary shares subject to the over-allotment option) took place on June 2, 2020 (“Settlement”). Prior to Settlement, we exchanged our 26.4 % ownership interest in JDE for a 26.5 % equity interest in JDE Peet’s. We did not invest new capital in connection with the transaction and the exchange was accounted for as a change in interest transaction. Upon Settlement, we sold approximately 9.7 million of our ordinary shares in JDE Peet’s in the offering for gross proceeds of € 304 million ($ 343 million). We subsequently sold approximately 1.4 million additional shares and received gross proceeds of € 46 million ($ 51 million) upon exercise of the over-allotment option. Following Settlement and the exercise of the over-allotment option, we held a 22.9 % equity interest in JDE Peet’s. During the second quarter of 2020, we recorded a preliminary gain of $ 121 million, net of $ 33 million released from accumulated other comprehensive losses, and $ 48 million of transaction costs. During the third quarter of 2020, we increased our preliminary gain by $ 10 million to $ 131 million. On September 20, 2021, we issued € 300 million exchangeable bonds, which are redeemable at maturity at their principal amount in cash or, at our option, through the delivery of an equivalent number of JDE Peet’s ordinary shares based on an initial exchange price of € 35.40 and, as the case may be, an additional amount in cash. If all bonds were redeemed in exchange for JDE Peet's shares, this would represent approximately 8.5 million shares or approximately 7 % of our equity interest in JDE Peet's. Refer to Note 9, Debt and Borrowing Arrangements , for further details on this transaction. As was the case in our ownership interest in JDE, we have significant influence with respect to JDE Peet’s, and we will continue to account for our investment in JDE Peet’s under the equity method, resulting in recognizing our share of JDE Peet’s earnings within our earnings and our share of JDE Peet’s dividends within our cash flows. Summary Financial Information for Equity Method Investments: Summarized financial information related to our equity method investments is reflected below. As of December 31, 2021 2020 (in millions) Current assets $ 6,313 $ 5,922 Noncurrent assets 71,949 72,941 Total assets $ 78,262 $ 78,863 Current liabilities $ 11,105 $ 11,784 Noncurrent liabilities 27,204 27,752 Total liabilities $ 38,309 $ 39,536 Equity attributable to shareowners of investees $ 39,798 $ 39,161 Equity attributable to noncontrolling interests 155 166 Total net equity of investees $ 39,953 $ 39,327 Mondelēz International ownership interests 5 - 50 % 8 - 50 % Equity method investments (1) $ 5,289 $ 6,036 96 Table of Contents For the Years Ended December 31, 2021 2020 2019 (in millions) Net revenues $ 22,149 $ 20,112 $ 19,361 Gross profit 10,804 9,856 9,781 Income from continuing operations 2,614 2,078 2,216 Net income 2,614 2,078 2,216 Net income attributable to investees $ 2,618 $ 2,070 $ 2,206 Mondelēz International ownership interests 5 - 50 % 8 - 50 % 13 - 50 % Equity method investment net earnings $ 393 $ 421 $ 501 (1) Includes a basis difference of approximately $ 475 million as of December 31, 2021 and $ 519 million as of December 31, 2020 between the U.S. GAAP accounting basis for our equity method investments and the U.S. GAAP accounting basis of our investees’ equity. Note 8. Restructuring Program On May 6, 2014, our Board of Directors approved a $ 3.5 billion 2014-2018 restructuring program and up to $ 2.2 billion of capital expenditures. On August 31, 2016, our Board of Directors approved a $ 600 million reallocation between restructuring program cash costs and capital expenditures so the $ 5.7 billion program consisted of approximately $ 4.1 billion of restructuring program costs ($ 3.1 billion cash costs and $ 1.0 billion non-cash costs) and up to $ 1.6 billion of capital expenditures. On September 6, 2018, our Board of Directors approved an extension of the restructuring program through 2022, an increase of $ 1.3 billion in the program charges and an increase of $ 700 million in capital expenditures. On October 21, 2021, our Board of Directors approved an extension of the restructuring program through 2023. The total $ 7.7 billion program now consists of $ 5.4 billion of program charges ($ 4.1 billion of cash costs and $ 1.3 billion of non-cash costs) and total capital expenditures of $ 2.3 billion to be incurred over the life of the program. The current restructuring program, as increased and extended by these actions, is now called the Simplify to Grow Program. The primary objective of the Simplify to Grow Program is to reduce our operating cost structure in both our supply chain and overhead costs. The program covers severance as well as asset disposals and other manufacturing and procurement-related one-time costs. Since inception, we have incurred total restructuring and related implementation charges of $ 5.0 billion related to the Simplify to Grow Program. We expect to incur the remainder of the program charges by year-end 2023. Restructuring Costs : The Simplify to Grow Program liability activity for the years ended December 31, 2021 and 2020 was: Severance and related costs Asset Write-downs and Other (1) Total (in millions) Liability Balance, January 1, 2020 $ 301 $ — $ 301 Charges 168 ( 12 ) 156 Cash spent ( 169 ) — ( 169 ) Non-cash settlements/adjustments ( 6 ) 12 6 Currency 10 — 10 Liability Balance, December 31, 2020 $ 304 $ — $ 304 Charges 86 68 154 Cash spent ( 160 ) — ( 160 ) Non-cash settlements/adjustments ( 5 ) ( 68 ) ( 73 ) Currency ( 14 ) — ( 14 ) Liability Balance, December 31, 2021 $ 211 $ — $ 211 (1) Includes gains as a result of assets sold which are included in the restructuring program. 97 Table of Contents • We recorded restructuring charges of $ 154 million in 2021, $ 156 million in 2020 and $ 176 million in 2019 within asset impairment and exit costs and benefit plan non-service income. • We spent $ 160 million in 2021 and $ 169 million in 2020 in cash severance and related costs. • In 2021, we recognized non-cash asset write-downs (including accelerated depreciation and asset impairments), non-cash pension settlement losses and other non-cash adjustments, partially offset by gains on sale of assets, primarily real estate, included in the restructuring program totaling $ 73 million. In 2020, we recognized a gain on sale of assets included in the restructuring program, partially offset by noncash asset write-downs (including accelerated depreciation and asset impairments), non-cash pension settlement losses and other non-cash adjustments totaling $ 6 million. • At December 31, 2021, $ 180 million of our net restructuring liability was recorded within other current liabilities and $ 31 million was recorded within other long-term liabilities. Implementation Costs: Implementation costs are directly attributable to restructuring activities; however, they do not qualify for special accounting treatment as exit or disposal activities. We believe the disclosure of implementation costs provides readers of our financial statements with more information on the total costs of our Simplify to Grow Program. Implementation costs primarily relate to reorganizing our operations and facilities in connection with our supply chain reinvention program and other identified productivity and cost saving initiatives. The costs include incremental expenses related to the closure of facilities, costs to terminate certain contracts and the simplification of our information systems. Within our continuing results of operations, we recorded implementation costs of $ 167 million in 2021, $ 207 million in 2020 and $ 272 million in 2019. We recorded these costs within cost of sales and general corporate expense within selling, general and administrative expenses. Restructuring and Implementation Costs in Operating Income: During 2021, 2020 and 2019, and since inception of the Simplify to Grow Program, we recorded the following restructuring and implementation costs within segment operating income and earnings before income taxes: Latin America AMEA Europe North America Corporate Total (in millions) For the Year Ended December 31, 2021 Restructuring Costs $ 7 $ ( 17 ) $ 4 $ 153 $ 7 $ 154 Implementation Costs 9 10 33 97 18 167 Total $ 16 $ ( 7 ) $ 37 $ 250 $ 25 $ 321 For the Year Ended December 31, 2020 Restructuring Costs $ 30 $ 23 $ 67 $ 23 $ 13 $ 156 Implementation Costs 18 23 63 72 31 207 Total $ 48 $ 46 $ 130 $ 95 $ 44 $ 363 For the Year Ended December 31, 2019 Restructuring Costs $ 24 $ 18 $ 105 $ 16 $ 13 $ 176 Implementation Costs 50 38 103 52 29 272 Total $ 74 $ 56 $ 208 $ 68 $ 42 $ 448 Total Project (Inception to Date) Restructuring Costs $ 554 $ 541 $ 1,147 $ 645 $ 149 $ 3,036 Implementation Costs 296 239 544 553 356 1,988 Total $ 850 $ 780 $ 1,691 $ 1,198 $ 505 $ 5,024 98 Table of Contents Note 9. Debt and Borrowing Arrangements Short-Term Borrowings: Our short-term borrowings and related weighted-average interest rates consisted of: As of December 31, 2021 2020 Amount Outstanding Weighted- Average Rate Amount Outstanding Weighted- Average Rate (in millions) (in millions) Commercial paper $ 192 0.2 % $ — — % Bank loans 24 8.6 % 29 4.8 % Total short-term borrowings $ 216 $ 29 Our uncommitted credit lines and committed credit lines available as of December 31, 2021 and December 31, 2020 include: As of December 31, 2021 2020 Facility Amount Borrowed Amount Facility Amount Borrowed Amount (in millions) Uncommitted credit facilities $ 1,367 $ 24 $ 1,487 $ 29 Credit facility expiry (1) : February 24, 2021 — — 1,500 — February 23, 2022 2,500 — — — February 27, 2024 4,500 — 4,500 — (1) We maintain a multi-year senior unsecured revolving credit facility for general corporate purposes, including working capital needs, and to support our commercial paper program. The revolving credit agreement includes a covenant that we maintain a minimum shareholders' equity of at least $ 24.6 billion, excluding accumulated other comprehensive earnings/(losses), the cumulative effects of any changes in accounting principles and earnings/(losses) recognized in connection with the ongoing application of any mark-to-market accounting for pensions and other retirement plans. At December 31, 2021, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $ 38.9 billion. The revolving credit facility also contains customary representations, covenants and events of default. There are no credit rating triggers, provisions or other financial covenants that could require us to post collateral as security . Long-Term Debt: Our long-term debt consisted of (interest rates are as of December 31, 2021): As of December 31, 2021 2020 (in millions) U.S. dollar notes, 0.625 % to 7.000 % (weighted-average effective rate 2.692 %), due through 2050 $ 9,280 $ 11,917 Euro notes, 0.000 % to 2.375 % (weighted-average effective rate 0.712 %), due through 2041 8,134 5,842 Pound sterling notes, 3.875 % to 4.500 % (weighted-average effective rate 4.151 %), due through 2045 354 357 Swiss franc notes, 0.615 % to 1.125 % (weighted-average effective rate 0.948 %), due through 2025 811 1,175 Canadian dollar notes, 3.250 % (effective rate 3.377 %), due through 2025 473 470 Finance leases and other 244 256 Total 19,296 20,017 Less current portion of long-term debt ( 1,746 ) ( 2,741 ) Long-term debt $ 17,550 $ 17,276 99 Table of Contents Deferred debt issuance costs of $ 71 million as of December 31, 2021 and $ 53 million as of December 31, 2020 are netted against the related debt in the table above. Deferred financing costs related to our revolving credit facility are classified in long-term other assets and were immaterial for all periods presented. As of December 31, 2021, aggregate maturities of our debt and finance leases based on stated contractual maturities, excluding unamortized non-cash bond premiums, discounts, bank fees and mark-to-market adjustments of $( 145 ) million and imputed interest on finance leases of $( 14 ) million, were (in millions): 2022 2023 2024 2025 2026 Thereafter Total $ 1,751 $ 359 $ 1,525 $ 1,469 $ 1,287 $ 13,064 $ 19,455 Tenders Offers: On October 16, 2020, we completed a tender offer in cash and redeemed $ 950 million of long term U.S. dollar-denominated notes for the following amounts (in millions): Interest Rate Maturity Date Amount Repurchased 3.625 % May 2023 $ 359 4.000 % February 2024 203 3.625 % February 2026 249 4.125 % May 2028 27 6.500 % November 2031 5 7.000 % August 2037 1 6.875 % February 2038 24 6.875 % January 2039 10 6.500 % February 2040 1 4.625 % May 2048 71 We recorded a loss on debt extinguishment of approximately $ 154 million within interest and other expense, net primarily related to the amount we paid in excess of the carrying value of the debt and from recognizing unamortized discounts, deferred financing and unamortized forward starting swaps in earnings at the time of the debt extinguishment. The cash payment related to the debt extinguishment were classified as cash outflows from financing activities in the consolidated statement of cash flows. Debt Redemptions: During 2021 we completed an early redemption of euro and U.S. dollar denominated notes for the following amounts (in millions): Interest Rate Redemption Date Maturity Date Amount Redeemed USD Equivalent 2.000 % September 2021 October 2021 $ 1,500 $ 1,500 3M LIBOR + 0.700 % September 2021 October 2022 $ 500 $ 500 3M LIBOR + 0.800 % September 2021 October 2024 $ 500 $ 500 1.000 % March 2021 March 2022 € 500 $ 587 1.625 % March 2021 January 2023 € 700 $ 821 2.125 % March 2021 April 2023 $ 500 $ 500 4.000 % March 2021 February 2024 $ 492 $ 492 We recorded an extinguishment loss of $ 137 million within interest and other expense, net related to $ 110 million paid in excess of carrying value of the debt and from recognizing unamortized discounts and deferred financing in earnings and $ 27 million foreign currency derivative loss related to the redemption at the time of the debt extinguishment. The cash payments related to the redemption were classified as cash outflows from financing activities in the consolidated statement of cash flows. 100 Table of Contents On December 4, 2020, we completed an early redemption of U.S. dollar denominated notes for the following amounts (in millions): Interest Rate Maturity Date Amount Redeemed 3.625 % May 2023 $ 391 We recorded an extinguishment loss of $ 31 million within interest and other expense, net primarily related to the amount we paid in excess of carrying value of the debt and from recognizing unamortized discounts and deferred financing in earnings at the time of the debt extinguishment. The cash payments related to the redemption were classified as cash outflows from financing activities in the consolidated statement of cash flows. Debt Repayments: In 2021, we repaid the following notes or term loans (in millions): Interest Rate Maturity Date Amount USD Equivalent 0.625 % December 2021 Fr. 300 $ 327 2.375 % January 2021 € 679 827 In 2020, we repaid the following notes or term loans (in millions): Interest Rate Maturity Date Amount USD Equivalent 0.625 % October 2020 Fr. 135 $ 147 Variable September 2020 (1) $ 750 750 3.000 % May 2020 $ 750 750 0.050 % March 2020 Fr. 225 234 5.375 % February 2020 $ 427 427 (1) We repaid the $ 750 million term loan early with proceeds from the issuance of notes. Debt Issuances: In 2021, we issued the following notes: Issuance Date Interest Rate Maturity Date Gross Proceeds (1) Gross Proceeds USD Equivalent September 2021 (2) 0.750 % September 2024 $ 500 $ 500 September 2021 (2) 1.250 % September 2026 $ 350 $ 350 September 2021 (2)(3) 0.000 % September 2024 € 300 $ 352 September 2021 (2)(4) 0.250 % September 2029 € 650 $ 769 September 2021 (2)(4) 0.625 % September 2032 € 650 $ 769 September 2021 (2)(4) 1.250 % September 2041 € 700 $ 828 March 2021 0.250 % March 2028 € 750 $ 896 March 2021 0.750 % March 2033 € 600 $ 717 March 2021 1.375 % March 2041 € 650 $ 777 101 Table of Contents In 2020, we issued the following notes: Issuance Date Interest Rate Maturity Date Gross Proceeds (1) Gross Proceeds USD Equivalent October 2020 1.875 % October 2032 $ 625 $ 625 October 2020 & September 2020 (5) 2.625 % September 2050 $ 1,125 $ 1,125 September 2020 (2) 0.000 % September 2026 € 500 $ 588 September 2020 (2) 0.375 % September 2029 € 750 $ 882 September 2020 1.500 % February 2031 $ 500 $ 500 July 2020 0.625 % July 2022 $ 1,000 $ 1,000 May 2020 1.500 % May 2025 $ 750 $ 750 May 2020 & April 2020 (5) 2.750 % April 2030 $ 1,250 $ 1,250 April 2020 2.125 % April 2023 $ 500 $ 500 (1) Represents gross proceeds from the issuance of notes excluding debt issuance costs, discounts and premiums. (2) Notes issued by Mondelez International Holdings Netherlands B.V. (“MIHN”), a wholly owned Dutch subsidiary of Mondelez International, Inc. (3) Issuance of exchangeable bonds that were issued at 102 % of their principal amount and are redeemable for cash or existing ordinary shares of JDE Peet's at our option (see Note 7, Equity Method Investments). Bondholders have an option to redeem bonds before maturity subject to exchange periods. We have identified our option to settle in either cash or existing ordinary shares of JDE Peet's as an embedded derivative that is bifurcated and accounted for separately from the bond. See Note 10, Financial Instruments. (4) Issuance of green bonds where we have committed to allocate an amount equal to the € 1.97 billion total net proceeds from the offering over time to eligible projects that align with our sustainability priorities in the areas of building a thriving ingredient supply chain and reducing our environmental impact. (5) This represents a further issuance of a previously issued note and forms a single series note . Fair Value of Our Debt: The fair value of our short-term borrowings at December 31, 2021 and December 31, 2020 reflects current market interest rates and approximates the amounts we have recorded on our consolidated balance sheets. The fair value of our long-term debt was determined using quoted prices in active markets (Level 1 valuation data) for the publicly traded debt obligations. As of December 31, 2021 2020 (in millions) Fair Value $ 20,249 $ 21,568 Carrying Value $ 19,512 $ 20,046 Interest and Other Expense, net: Interest and other expense, net within our results of continuing operations consisted of: For the Years Ended December 31, 2021 2020 2019 (in millions) Interest expense, debt $ 365 $ 423 $ 484 Loss on debt extinguishment and related expenses 137 185 — Loss related to interest rate swaps — 103 111 Other income, net ( 55 ) ( 103 ) ( 139 ) Interest and other expense, net $ 447 $ 608 $ 456 See Note 10, Financial Instruments , for information on the gain/loss related to U.S. dollar interest rate swaps no longer designated as accounting cash flow hedges and for information on amounts in other income related to our net investment hedge derivative contracts and the amounts excluded from hedge effectiveness of $ 75 million in 2021, $ 117 million in 2020 and $ 133 million in 2019. 102 Table of Contents Note 10. Financial Instruments Fair Value of Derivative Instruments: Derivative instruments were recorded at fair value in the consolidated balance sheets as follows: As of December 31, 2021 2020 Asset Derivatives Liability Derivatives Asset Derivatives Liability Derivatives (in millions) Derivatives designated as accounting hedges: Interest rate contracts $ 27 $ 17 $ 12 $ 340 Net investment hedge derivative contracts (1) 117 45 114 129 $ 144 $ 62 $ 126 $ 469 Derivatives not designated as accounting hedges: Currency exchange contracts $ 156 $ 40 $ 134 $ 119 Commodity contracts 387 137 205 128 Equity method investment contracts (2) — 3 — — $ 543 $ 180 $ 339 $ 247 Total fair value $ 687 $ 242 $ 465 $ 716 (1) Net investment hedge contracts consist of cross-currency interest rate swaps and forward contracts. We also designate some of our non-U.S. dollar denominated debt to hedge a portion of our net investments in our non-U.S. operations. This debt is not reflected in the table above, but is included in long-term debt discussed in Note 9, Debt and Borrowing Arrangements . Both net investment hedge derivative contracts and non-U.S. dollar denominated debt acting as net investment hedges are also disclosed in the Derivative Volume table and the Hedges of Net Investments in International Operations section appearing later in this footnote. (2) Equity method investment contracts consist of the bifurcated embedded derivative option that was a component of the September 20, 2021 € 300 million exchangeable bonds issuance. Refer to Note 9, Debt and Borrowing Arrangements . Derivatives designated as accounting hedges above include cash flow and net investment hedge derivative contracts. Our currency exchange, commodity derivative and equity method investment contracts are economic hedges that are not designated as accounting hedges. We record derivative assets and liabilities on a gross basis on our consolidated balance sheets. The fair value of our asset derivatives is recorded within other current assets and other assets and the fair value of our liability derivatives is recorded within other current liabilities and other liabilities. The fair values (asset/(liability)) of our derivative instruments were determined using: As of December 31, 2021 Total Fair Value of Net Asset/(Liability) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Currency exchange contracts $ 116 $ — $ 116 $ — Commodity contracts 251 161 90 — Interest rate contracts 10 10 Net investment hedge contracts 71 — 71 — Equity method investment contracts ( 3 ) — ( 3 ) — Total derivatives $ 445 $ 161 $ 284 $ — 103 Table of Contents As of December 31, 2020 Total Fair Value of Net Asset/(Liability) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Currency exchange contracts $ 15 $ — $ 15 $ — Commodity contracts 77 46 31 — Interest rate contracts ( 328 ) — ( 328 ) — Net investment hedge contracts ( 15 ) — ( 15 ) — Total derivatives $ ( 251 ) $ 46 $ ( 297 ) $ — Level 1 financial assets and liabilities consist of exchange-traded commodity futures and listed options. The fair value of these instruments is determined based on quoted market prices on commodity exchanges. Level 2 financial assets and liabilities consist primarily of over-the-counter (“OTC”) currency exchange forwards, options and swaps; commodity forwards and options; net investment hedge contracts; and interest rate swaps. Our currency exchange contracts are valued using an income approach based on observable market forward rates less the contract rate multiplied by the notional amount. Commodity derivatives are valued using an income approach based on the observable market commodity index prices less the contract rate multiplied by the notional amount or based on pricing models that rely on market observable inputs such as commodity prices. Our bifurcated exchange options are valued, as derivative instrument liabilities, using the Black-Scholes option pricing model. This model requires assumptions related to the market price of the underlying note and associated credit spread combined with the share of price, expected dividend yield, and expected volatility of the JDE Peet’s shares over the life of the option. Our calculation of the fair value of interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the observable market interest rate curve. Our calculation of the fair value of financial instruments takes into consideration the risk of nonperformance, including counterparty credit risk. Our OTC derivative transactions are governed by International Swap Dealers Association agreements and other standard industry contracts. Under these agreements, we do not post nor require collateral from our counterparties. The majority of our derivative contracts do not have a legal right of set-off. We manage the credit risk in connection with these and all our derivatives by entering into transactions with counterparties with investment grade credit ratings, limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties. 104 Table of Contents Derivative Volume: The gross notional values of our derivative instruments were: Notional Amount As of December 31, 2021 2020 (in millions) Currency exchange contracts: Intercompany loans and forecasted interest payments $ 1,891 $ 2,184 Forecasted transactions 4,831 4,169 Commodity contracts 9,694 7,947 Interest rate contracts 1,850 3,500 Net investment hedges: Net investment hedge derivative contracts 3,915 4,551 Non-U.S. dollar debt designated as net investment hedges Euro notes 3,622 3,744 British pound sterling notes 356 360 Swiss franc notes 811 1,175 Canadian dollar notes 475 472 Cash Flow Hedges: Cash flow hedge activity, net of taxes, within accumulated other comprehensive earnings/(losses) included: For the Years Ended December 31, 2021 2020 2019 (in millions) Accumulated (loss)/gain at beginning of period $ ( 161 ) $ ( 213 ) $ ( 168 ) Transfer of realized (gains)/losses in fair value to earnings ( 155 ) 161 154 Unrealized gain/(loss) in fair value 168 ( 109 ) ( 199 ) Accumulated (loss)/gain at end of period $ ( 148 ) $ ( 161 ) $ ( 213 ) After-tax gains/(losses) reclassified from accumulated other comprehensive earnings/(losses) into net earnings were: For the Years Ended December 31, 2021 2020 2019 (in millions) Interest rate contracts $ 155 $ ( 161 ) $ ( 154 ) Within interest and other expense, net, we recognized losses related to forward starting interest rate swaps of $ 79 million ($ 103 million pre-tax) in 2020 and a loss of $ 111 million in 2019. After-tax gains/(losses) recognized in other comprehensive earnings/(losses) were: For the Years Ended December 31, 2021 2020 2019 (in millions) Currency exchange contracts – forecasted transactions $ — $ ( 2 ) $ 3 Interest rate contracts 168 ( 107 ) ( 202 ) Total $ 168 $ ( 109 ) $ ( 199 ) Cash flow hedge ineffectiveness was immaterial for all periods presented. 105 Table of Contents We record pre-tax (i) gains or losses reclassified from accumulated other comprehensive earnings/(losses) into earnings, (ii) gains or losses on ineffectiveness and (iii) gains or losses on amounts excluded from effectiveness testing in interest and other expense, net for interest rate contracts. Based on current market conditions, we would expect to transfer losses of $ 28 million (net of taxes) for interest rate cash flow hedges to earnings during the next 12 months. Cash Flow Hedge Coverage: As of December 31, 2021, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 4 years, 8 months . Hedges of Net Investments in International Operations: Net investment hedge (“NIH”) derivative contracts: We enter into cross-currency interest rate swaps and forwards to hedge certain investments in our non-U.S. operations against movements in exchange rates. As of December 31, 2021, the aggregate notional value of these NIH derivative contracts was $ 3.9 billion and their impact on other comprehensive earnings and net earnings during the years presented below were as follows: For the Years Ended December 31, 2021 2020 2019 (in millions) After-tax gain/(loss) on NIH contracts (1) $ 63 $ ( 221 ) $ ( 6 ) (1) Amounts recorded for unsettled and settled NIH derivative contracts are recorded in the cumulative translation adjustment within other comprehensive earnings. The cash flows from the settled contracts are reported within other investing activities in the consolidated statement of cash flows. For the Years Ended December 31, 2021 2020 2019 (in millions) Amounts excluded from the assessment of hedge effectiveness (1) $ 75 $ 117 $ 133 (1) We elected to record changes in the fair value of amounts excluded from the assessment of effectiveness in net earnings within interest and other expense, net. Non-U.S. dollar debt designated as net investment hedges: After-tax gains/(losses) related to hedges of net investments in international operations in the form of euro, British pound sterling, Swiss franc and Canadian dollar-denominated debt were recorded within the cumulative translation adjustment section of other comprehensive income and were: For the Years Ended December 31, 2021 2020 2019 (in millions) Euro notes $ 211 $ ( 251 ) $ 60 British pound sterling notes 3 ( 8 ) ( 10 ) Swiss franc notes 29 ( 82 ) ( 19 ) Canadian notes ( 3 ) ( 7 ) ( 17 ) 106 Table of Contents Economic Hedges: Pre-tax gains/(losses) recorded in net earnings for economic hedges were: For the Years Ended December 31, Recognized in Earnings 2021 2020 2019 (in millions) Currency exchange contracts: Intercompany loans and forecasted interest payments $ 57 $ ( 70 ) $ 100 Interest and other expense, net Forecasted transactions 80 41 17 Cost of sales Forecasted transactions ( 1 ) ( 4 ) ( 3 ) Interest and other expense, net Forecasted transactions — ( 1 ) ( 8 ) Selling, general and administrative expenses Commodity contracts 385 4 67 Cost of sales Equity method investment contracts 2 — — Gain on equity method investment contracts Total $ 523 $ ( 30 ) $ 173 Note 11. Benefit Plans Pension Plans Obligations and Funded Status: The projected benefit obligations, plan assets and funded status of our pension plans were: U.S. Plans Non-U.S. Plans 2021 2020 2021 2020 (in millions) Projected benefit obligation at January 1 $ 1,887 $ 1,748 $ 11,658 $ 10,458 Service cost 6 6 137 121 Interest cost 42 49 130 149 Benefits paid ( 31 ) ( 35 ) ( 533 ) ( 473 ) Settlements paid ( 113 ) ( 95 ) — — Actuarial (gains)/losses ( 63 ) 213 ( 269 ) 679 Currency — — ( 308 ) 572 Other (1) 1 1 6 152 Projected benefit obligation at December 31 1,729 1,887 10,821 11,658 Fair value of plan assets at January 1 1,959 1,739 10,972 9,758 Actual return on plan assets 1 337 548 865 Contributions 10 13 292 208 Benefits paid ( 31 ) ( 35 ) ( 533 ) ( 473 ) Settlements paid ( 113 ) ( 95 ) — — Currency — — ( 258 ) 489 Other (1) — — — 125 Fair value of plan assets at December 31 1,826 1,959 11,021 10,972 Net pension (liabilities)/assets at December 31 $ 97 $ 72 $ 200 $ ( 686 ) (1) In 2020 we reviewed the impact of market changes on design features of certain historical defined contribution plans. The review resulted in additional plans being accounted for as defined benefit pension plans, which resulted in increases of $ 133 million in the projected benefit obligation and $ 125 million in plan assets in 2020. 107 Table of Contents The accumulated benefit obligation, which represents benefits earned to the measurement date, for U.S. pension plans was $ 1,723 million at December 31, 2021 and $ 1,882 million at December 31, 2020. The accumulated benefit obligation for non-U.S. pension plans was $ 10,650 million at December 31, 2021 and $ 11,404 million at December 31, 2020. The actuarial (gain) loss for all pension plans in 2020 and 2021 was primarily related to a change in the discount rate used to measure the benefit obligations of those plans. Salaried and non-union hourly employees hired after January 1, 2009 in the U.S. and after January 1, 2011 in Canada (or earlier for certain legacy Cadbury employees) are no longer eligible to participate in the defined benefit pension plans. Benefit accruals for salaried and non-union hourly employee participants in the U.S. and Canada defined benefit pension plans ceased on December 31, 2019. These employees instead receive Company contributions to the employee defined contribution plans. The combined U.S. and non-U.S. pension plans resulted in a net pension asset of $ 297 million at December 31, 2021 and a net pension liability of $ 614 million at December 31, 2020. We recognized these amounts in our consolidated balance sheets as follows: As of December 31, 2021 2020 (in millions) Prepaid pension assets $ 1,009 $ 672 Other current liabilities ( 31 ) ( 29 ) Accrued pension costs ( 681 ) ( 1,257 ) $ 297 $ ( 614 ) Certain of our U.S. and non-U.S. plans are underfunded with accumulated benefit obligations in excess of plan assets. For these plans, the projected benefit obligations, accumulated benefit obligations and the fair value of plan assets were: U.S. Plans Non-U.S. Plans As of December 31, As of December 31, 2021 2020 2021 2020 (in millions) Projected benefit obligation $ 42 $ 51 $ 1,889 $ 4,059 Accumulated benefit obligation 42 51 1,805 3,873 Fair value of plan assets 3 3 1,223 2,827 We used the following weighted-average assumptions to determine our benefit obligations under the pension plans: U.S. Plans Non-U.S. Plans As of December 31, As of December 31, 2021 2020 2021 2020 Discount rate 3.01 % 2.73 % 1.73 % 1.33 % Expected rate of return on plan assets 4.50 % 4.50 % 3.44 % 3.90 % Rate of compensation increase 4.00 % 4.00 % 2.83 % 3.16 % Year-end discount rates for our U.S., Canadian, Eurozone and U.K. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the benefit obligations. Year-end discount rates for our remaining non-U.S. plans were developed from local bond indices that match local benefit obligations as closely as possible. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. We determine our expected rate of return on plan assets from the plan assets’ historical long-term investment performance, current asset allocation and estimates of future long-term returns by asset class. 108 Table of Contents For the periods presented, we measure service and interest costs by applying the specific spot rates along a yield curve used to measure plan obligations to the plans’ liability cash flows. We believe this approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. Components of Net Periodic Pension Cost: Net periodic pension cost consisted of the following: U.S. Plans Non-U.S. Plans For the Years Ended December 31, For the Years Ended December 31, 2021 2020 2019 2021 2020 2019 (in millions) Service cost $ 6 $ 6 $ 38 $ 137 $ 121 $ 122 Interest cost 42 49 60 130 149 202 Expected return on plan assets ( 72 ) ( 77 ) ( 88 ) ( 419 ) ( 400 ) ( 404 ) Amortization: Net loss/(gain) 17 17 30 130 118 148 Prior service cost/(benefit) 1 1 1 ( 6 ) ( 7 ) ( 6 ) Curtailment credit (1) — — — ( 17 ) — — Settlement losses and other expenses 19 18 16 3 4 ( 3 ) Net periodic pension cost $ 13 $ 14 $ 57 $ ( 42 ) $ ( 15 ) $ 59 (1) During the third quarter of 2021, we terminated our Defined Benefit Pension Scheme in Nigeria. During the second quarter of 2021, we made a decision to freeze our Defined Benefit Pension Scheme in the United Kingdom. As a result, we recognized curtailment credits of ($ 17 million) in 2021 recorded within benefit plan non-service income. In connection with the United Kingdom plan freeze, we also incurred incentive payment charges and other expenses of $ 48 million in 2021 included in operating income. For the U.S. plans, we determine the expected return on plan assets component of net periodic benefit cost using a calculated market return value that recognizes the cost over a four-year period. For our non-U.S. plans, we utilize a similar approach with varying cost recognition periods for some plans, and with others, we determine the expected return on plan assets based on asset fair values as of the measurement date. We used the following weighted-average assumptions to determine our net periodic pension cost: U.S. Plans Non-U.S. Plans For the Years Ended December 31, For the Years Ended December 31, 2021 2020 2019 2021 2020 2019 Discount rate 2.73 % 3.44 % 4.40 % 1.33 % 1.74 % 2.45 % Expected rate of return on plan assets 4.50 % 5.00 % 5.75 % 3.90 % 4.20 % 4.80 % Rate of compensation increase 4.00 % 4.00 % 4.00 % 3.16 % 3.17 % 3.31 % 109 Table of Contents Plan Assets: The fair value of pension plan assets was determined using the following fair value measurements: As of December 31, 2021 Asset Category Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) U.S. equity securities $ 4 $ 4 $ — $ — Non-U.S. equity securities 3 3 — — Pooled funds - equity securities 1,545 1,084 461 — Total equity securities 1,552 1,091 461 — Government bonds 3,777 56 3,721 — Pooled funds - fixed-income securities 648 449 199 — Corporate bonds and other fixed-income securities 3,943 139 1,415 2,389 Total fixed-income securities 8,368 644 5,335 2,389 Real estate 251 179 — 72 Private equity 4 — — 4 Cash 5 4 — 1 Other 162 157 5 — Total assets in the fair value hierarchy $ 10,342 $ 2,075 $ 5,801 $ 2,466 Investments measured at net asset value 2,382 Total investments at fair value $ 12,724 As of December 31, 2020 Asset Category Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) U.S. equity securities $ 4 $ 4 $ — $ — Non-U.S. equity securities 1 1 — — Pooled funds - equity securities 2,225 999 1,226 — Total equity securities 2,230 1,004 1,226 — Government bonds 4,340 60 4,280 — Pooled funds - fixed-income securities 622 439 183 — Corporate bonds and other fixed-income securities 2,860 258 811 1,791 Total fixed-income securities 7,822 757 5,274 1,791 Real estate 212 142 — 70 Private equity 3 — — 3 Cash 117 107 10 — Other 5 4 — 1 Total assets in the fair value hierarchy $ 10,389 $ 2,014 $ 6,510 $ 1,865 Investments measured at net asset value 2,413 Total investments at fair value $ 12,802 We excluded plan assets of $ 124 million at December 31, 2021 and $ 129 million at December 31, 2020 from the above tables related to certain insurance contracts as they are reported at contract value, in accordance with authoritative guidance. 110 Table of Contents Fair value measurements • Level 1 – includes primarily U.S and non-U.S. equity securities and government bonds valued using quoted prices in active markets. • Level 2 – includes primarily pooled funds, including assets in real estate pooled funds, valued using net asset values of participation units held in common collective trusts, as reported by the managers of the trusts and as supported by the unit prices of actual purchase and sale transactions. Level 2 plan assets also include corporate bonds and other fixed-income securities, valued using independent observable market inputs, such as matrix pricing, yield curves and indices. • Level 3 – includes investments valued using unobservable inputs that reflect the plans’ assumptions that market participants would use in pricing the assets, based on the best information available. • Fair value estimates for pooled funds are calculated by the investment advisor when reliable quotations or pricing services are not readily available for certain underlying securities. The estimated value is based on either cost or last sale price for most of the securities valued in this fashion. • Fair value estimates for private equity investments are calculated by the general partners using the market approach to estimate the fair value of private investments. The market approach utilizes prices and other relevant information generated by market transactions, type of security, degree of liquidity, restrictions on the disposition, latest round of financing data, company financial statements, relevant valuation multiples and discounted cash flow analyses. • Fair value estimates for private debt placements are calculated using standardized valuation methods, including but not limited to income-based techniques such as discounted cash flow projections or market-based techniques utilizing public and private transaction multiples as comparables. • Fair value estimates for real estate investments are calculated by investment managers using the present value of future cash flows expected to be received from the investments, based on valuation methodologies such as appraisals, local market conditions, and current and projected operating performance. • Fair value estimates for fixed-income securities that are buy-in annuity policies are calculated on a replacement policy value basis by discounting the projected cash flows of the plan members using a discount rate based on risk-free rates and adjustments for estimated levels of insurer pricing. • Net asset value – primarily includes equity funds, fixed income funds, real estate funds, hedge funds and private equity investments for which net asset values are normally used. Changes in our Level 3 plan assets, which are recorded in other comprehensive earnings/(losses), included: Asset Category January 1, 2021 Balance Net Realized and Unrealized Gains/ (Losses) Net Purchases, Issuances and Settlements Net Transfers Into/(Out of) Level 3 Currency Impact December 31, 2021 Balance (in millions) Corporate bond and other fixed-income securities $ 1,791 $ ( 178 ) $ 784 $ — $ ( 10 ) $ 2,387 Real estate 70 7 1 — ( 4 ) 74 Private equity and other 4 1 — — — 5 Total Level 3 investments $ 1,865 $ ( 170 ) $ 785 $ — $ ( 14 ) $ 2,466 Asset Category January 1, 2020 Balance Net Realized and Unrealized Gains/ (Losses) Net Purchases, Issuances and Settlements Net Transfers Into/(Out of) Level 3 Currency Impact December 31, 2020 Balance (in millions) Corporate bond and other fixed-income securities $ 1,836 $ 16 $ ( 110 ) $ — $ 49 $ 1,791 Real estate 62 5 — — 3 70 Private equity and other 4 — — — — 4 Total Level 3 investments $ 1,902 $ 21 $ ( 110 ) $ — $ 52 $ 1,865 The increase in Level 3 pension plan investments during 2021 was primarily due to purchases of corporate bond, annuity contracts and other fixed income securities. The decrease in Level 3 pension plan investments during 2020 was primarily due to maturities of corporate bond and other fixed income securities. 111 Table of Contents The percentage of fair value of pension plan assets was: U.S. Plans Non-U.S. Plans As of December 31, As of December 31, Asset Category 2021 2020 2021 2020 Equity securities 15 % 15 % 17 % 23 % Fixed-income securities 85 % 85 % 62 % 58 % Real estate — — 3 % 5 % Hedge funds — — — % 2 % Buy-in annuity policies — — 17 % 11 % Cash — — 1 % 1 % Total 100 % 100 % 100 % 100 % For our U.S. plans, our investment strategy is to reduce our funded status risk in part through appropriate asset allocation within our plan assets. We attempt to maintain our target asset allocation by rebalancing between asset classes as we make monthly benefit payments. The strategy involves using indexed U.S. equity and international equity securities and actively managed U.S. investment grade fixed-income securities (which constitute 95 % or more of fixed-income securities) with smaller allocations to high yield fixed-income securities. For our non-U.S. plans, the investment strategy is subject to local regulations and the asset/liability profiles of the plans in each individual country. In aggregate, the asset allocation targets of our non-U.S. plans are broadly characterized as a mix of approximately 15 % equity securities, 58 % fixed-income securities, 24 % buy-in annuity policies and 3 % real estate. Employer Contributions: In 2021, we contributed $ 10 million to our U.S. pension plans and $ 271 million to our non-U.S. pension plans. In addition, employees contributed $ 21 million to our non-U.S. plans. We make contributions to our pension plans in accordance with local funding arrangements and statutory minimum funding requirements. Discretionary contributions are made to the extent that they are tax deductible and do not generate an excise tax liability. In 2022, we estimate that our pension contributions will be $ 3 million to our U.S. plans and $ 185 million to our non-U.S. plans based on current tax laws. Our actual contributions may be different due to many factors, including changes in tax and other benefit laws, significant differences between expected and actual pension asset performance or interest rates. Future Benefit Payments: The estimated future benefit payments from our pension plans at December 31, 2021 were (in millions): 2022 2023 2024 2025 2026 2027-2031 U.S. Plans $ 154 $ 106 $ 101 $ 103 $ 102 $ 495 Non-U.S. Plans 422 414 425 430 443 2,266 Multiemployer Pension Plans: In accordance with obligations we have under collective bargaining agreements, we made contributions to multiemployer pension plans for continuing participation of $ 4 million in 2021, $ 5 million in 2020 and $ 5 million in 2019. Our contributions are based on our contribution rates under our collective bargaining agreements, the number of our eligible employees and fund surcharges. In 2018, we executed a complete withdrawal from the Bakery and Confectionery Union and Industry International Pension Fund and recorded a $ 429 million estimated withdrawal liability. On July 11, 2019, we received an undiscounted withdrawal liability assessment from the Fund totaling $ 526 million requiring pro-rata monthly payments over 19 years. We began making monthly payments during the third quarter of 2019. Within selling, general and administrative expenses, we recorded a $ 35 million ($ 26 million net of tax) adjustment related to the discounted withdrawal liability. Within interest and other expense, net, we recorded accreted interest of $ 11 million in 2021, $ 11 million in 2020 and $ 12 million in 2019. As of December 31, 2021, the remaining discounted withdrawal liability was $ 360 million, with $ 14 million recorded in other current liabilities and $ 346 million recorded in long-term other liabilities. 112 Table of Contents Other Costs: We sponsor and contribute to employee defined contribution plans. These plans cover eligible salaried, non-union and union employees. Our contributions and costs are determined by the matching of employee contributions, as defined by the plans. Amounts charged to expense in continuing operations for defined contribution plans totaled $ 73 million in 2021, $ 83 million in 2020 and $ 72 million in 2019. Postretirement Benefit Plans Obligations: Our postretirement health care plans are not funded. The changes in and the amount of the accrued benefit obligation were: As of December 31, 2021 2020 (in millions) Accrued benefit obligation at January 1 $ 361 $ 403 Service cost 4 5 Interest cost 8 12 Benefits paid ( 15 ) ( 17 ) Currency ( 1 ) ( 1 ) Actuarial losses/(gains) ( 39 ) ( 41 ) Accrued benefit obligation at December 31 $ 317 $ 361 The current portion of our accrued postretirement benefit obligation of $ 16 million at December 31, 2021 and $ 16 million at December 31, 2020 was included in other current liabilities. The actuarial (gain) for all postretirement plans in 2020 and 2021 was driven by gains related to assumption changes partially offset by losses related to a change in the discount rate used to measure the benefit obligations of those plans. We used the following weighted-average assumptions to determine our postretirement benefit obligations: U.S. Plans Non-U.S. Plans As of December 31, As of December 31, 2021 2020 2021 2020 Discount rate 2.96 % 2.68 % 3.81 % 3.35 % Health care cost trend rate assumed for next year 5.50 % 5.75 % 5.72 % 5.66 % Ultimate trend rate 5.00 % 5.00 % 4.47 % 4.44 % Year that the rate reaches the ultimate trend rate 2024 2024 2040 2040 Year-end discount rates for our U.S., Canadian and U.K. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the benefit obligations. Year-end discount rates for our remaining non-U.S. plans were developed from local bond indices that match local benefit obligations as closely as possible. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. Our expected health care cost trend rate is based on historical costs. For the periods presented, we measure service and interest costs for other postretirement benefits by applying the specific spot rates along a yield curve used to measure plan obligations to the plans’ liability cash flows. We believe this approach provides a good measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. 113 Table of Contents Components of Net Periodic Postretirement Health Care Costs: Net periodic postretirement health care costs consisted of the following: For the Years Ended December 31, 2021 2020 2019 (in millions) Service cost $ 4 $ 5 $ 5 Interest cost 8 12 15 Amortization: Net loss/(gain) 2 7 6 Prior service credit — ( 30 ) ( 38 ) Net periodic postretirement health care costs/(benefit) $ 14 $ ( 6 ) $ ( 12 ) We used the following weighted-average assumptions to determine our net periodic postretirement health care cost: U.S. Plans Non-U.S. Plans For the Years Ended December 31, For the Years Ended December 31, 2021 2020 2019 2021 2020 2019 Discount rate 2.68 % 3.41 % 4.37 % 3.35 % 3.86 % 4.40 % Health care cost trend rate 5.75 % 6.00 % 6.25 % 5.66 % 5.42 % 5.44 % Future Benefit Payments: Our estimated future benefit payments for our postretirement health care plans at December 31, 2021 were (in millions): 2022 2023 2024 2025 2026 2027-2031 U.S. Plans $ 11 $ 11 $ 11 $ 11 $ 11 $ 50 Non-U.S. Plans 5 5 5 5 5 28 Other Costs: We made contributions to multiemployer medical plans totaling $ 19 million in 2021, $ 20 million in 2020 and $ 20 million in 2019. These plans provide medical benefits to active employees and retirees under certain collective bargaining agreements. Postemployment Benefit Plans Obligations: Our postemployment plans are not funded. The changes in and the amount of the accrued benefit obligation at December 31, 2021 and 2020 were: As of December 31, 2021 2020 (in millions) Accrued benefit obligation at January 1 $ 65 $ 66 Service cost 6 6 Interest cost 3 3 Benefits paid ( 12 ) ( 10 ) Actuarial losses/(gains) ( 6 ) — Accrued benefit obligation at December 31 $ 56 $ 65 114 Table of Contents The accrued benefit obligation was determined using a weighted-average discount rate of 4.3 % in 2021 and 4.3 % in 2020, an assumed weighted-average ultimate annual turnover rate of 0.4 % in 2021 and 2020, assumed compensation cost increases of 4.0 % in 2021 and 2020 and assumed benefits as defined in the respective plans. Postemployment costs arising from actions that offer employees benefits in excess of those specified in the respective plans are charged to expense when incurred. Components of Net Periodic Postemployment Costs: Net periodic postemployment costs consisted of the following: For the Years Ended December 31, 2021 2020 2019 (in millions) Service cost $ 6 $ 6 $ 6 Interest cost 3 3 5 Amortization of net gains ( 4 ) ( 2 ) ( 4 ) Net periodic postemployment costs $ 5 $ 7 $ 7 As of December 31, 2021, the estimated net gain for the postemployment benefit plans that we expect to amortize from accumulated other comprehensive earnings/(losses) into net periodic postemployment costs during 2022 is approximately $ 4 million. Note 12. Stock Plans Under our Amended and Restated 2005 Performance Incentive Plan (the “2005 Plan”), we are authorized through May 21, 2024 to issue a maximum of 243.7 million shares of our Class A common stock (“Common Stock”) to employees and non-employee directors. As of December 31, 2021, there were 48.9 million shares available to be granted under the 2005 Plan. Stock Options: Stock options (including stock appreciation rights) are granted at an exercise price equal to the market value of the underlying stock on the grant date, generally become exercisable in three annual installments beginning on the first anniversary of the grant date and have a maximum term of ten years . We account for our employee stock options under the fair value method of accounting using a Black-Scholes methodology or a Lattice Model to measure stock option expense at the date of grant. The fair value of the stock options at the date of grant is amortized to expense over the vesting period. We recorded compensation expense related to stock options held by our employees of $ 23 million in 2021, $ 28 million in 2020 and $ 38 million in 2019 in our results from continuing operations. The deferred tax benefit recorded related to this compensation expense was $ 4 million in 2021, $ 5 million in 2020 and $ 8 million in 2019. The unamortized compensation expense related to our employee stock options was $ 21 million at December 31, 2021 and is expected to be recognized over a weighted-average period of 1.6 years. Our weighted-average Black-Scholes and Lattice Model fair value assumptions were: Risk-Free Interest Rate Expected Life Expected Volatility Expected Dividend Yield Fair Value at Grant Date 2021 0.57 % 5 years 23.45 % 2.20 % $ 9.08 2020 1.34 % 5 years 19.64 % 2.06 % $ 8.61 2019 2.46 % 5 years 19.96 % 2.37 % $ 7.83 The risk-free interest rate represents the constant maturity U.S. government treasuries rate with a remaining term equal to the expected life of the options. The expected life is the period over which our employees are expected to hold their options. Volatility reflects historical movements in our stock price for a period commensurate with the expected life of the options. The dividend yield reflects the dividend yield in place at the time of the historical grants. 115 Table of Contents Stock option activity is reflected below: Shares Subject to Option Weighted- Average Exercise or Grant Price Per Share Average Remaining Contractual Term Aggregate Intrinsic Value Balance at January 1, 2019 43,818,830 $ 32.36 $ 371 million Annual grant to eligible employees 4,793,570 47.72 Additional options issued 68,420 50.82 Total options granted 4,861,990 47.76 Options exercised (1) ( 13,668,354 ) 27.53 $ 306 million Options cancelled ( 1,156,518 ) 42.22 Balance at December 31, 2019 33,855,948 36.19 $ 640 million Annual grant to eligible employees 2,280,440 59.04 Additional options issued 136,360 49.48 Total options granted 2,416,800 58.50 Options exercised (1) ( 7,847,964 ) 30.55 $ 205 million Options cancelled ( 672,890 ) 44.94 Balance at December 31, 2020 27,751,894 39.51 $ 527 million Annual grant to eligible employees 2,412,710 56.13 Additional options issued 160,640 58.17 Total options granted 2,573,350 56.26 Options exercised (1) ( 6,249,330 ) 33.68 $ 169 million Options cancelled ( 572,155 ) 49.65 Balance at December 31, 2021 23,503,759 42.65 5 years $ 556 million Exercisable at December 31, 2021 18,570,547 39.40 4 years $ 500 million (1) Cash received from options exercised was $ 206 million in 2021, $ 236 million in 2020 and $ 369 million in 2019. The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $ 24 million in 2021, $ 27 million in 2020 and $ 40 million in 2019. Deferred Stock Units, Performance Share Units and Other Stock-Based Awards: Deferred stock units granted to eligible employees have most shareholder rights, except that they may not sell, assign, pledge or otherwise encumber the shares and our deferred stock units do not have voting rights until vested. Deferred stock units are subject to forfeiture if certain employment conditions are not met. Deferred stock units generally vest on the third anniversary of the grant date. Performance share units granted under our 2005 Plan vest based on varying performance, market and service conditions. The unvested performance share units have no voting rights and do not pay dividends. Dividend equivalents accumulated over the vesting period are paid only after the performance share units vest. The fair value of the deferred stock units, performance share units and other stock-based awards at the date of grant is amortized to earnings over the vesting period. The fair value of our deferred stock units and other stock-based awards is measured at the market price of our Common Stock on the grant date. Performance share unit awards generally have targets tied to both performance and market-based conditions. For market condition components, market volatility and other factors are taken into consideration in determining the grant date fair value and the related compensation expense is recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided. For performance condition components, we estimate the probability that the performance conditions will be achieved each quarter and adjust compensation expenses accordingly. The grant date fair value of performance share units is determined based on the Monte Carlo simulation model for the market-based total shareholder return component and the market price of our Common Stock on the grant date for performance-based components. The number of performance share units that ultimately vest ranges from 0 - 200 percent of the number granted, based on the achievement of the performance and market-based components. 116 Table of Contents We recorded compensation expense related to deferred stock units, performance share units and other stock-based awards of $ 98 million in 2021, $ 98 million in 2020 and $ 97 million in 2019 in our results from continuing operations. The deferred tax benefit recorded related to this compensation expense was $ 16 million in 2021, $ 15 million in 2020 and $ 16 million in 2019. The unamortized compensation expense related to our deferred stock units, performance share units and other stock-based awards was $ 107 million at December 31, 2021 and is expected to be recognized over a weighted-average period of 1.7 years. Our performance share unit, deferred stock unit and other stock-based award activity is reflected below: Number of Shares Grant Date Weighted-Average Fair Value Per Share (4) Weighted-Average Aggregate Fair Value (3) Balance at January 1, 2019 6,559,010 $ 42.19 Annual grant to eligible employees: Feb. 22, 2019 Performance share units 891,210 57.91 Deferred stock units 666,880 47.72 Additional shares granted (1) 205,073 Various 54.81 Total shares granted 1,763,163 53.69 $ 95 million Vested (2) (3) ( 2,007,848 ) 37.81 $ 76 million Forfeited (2) ( 652,380 ) 45.88 Balance at December 31, 2019 5,661,945 46.90 Annual grant to eligible employees: Feb. 20, 2020 Performance share units 825,230 65.83 Deferred stock units 545,550 59.04 Additional shares granted (1) 390,730 Various 56.90 Total shares granted 1,761,510 61.75 $ 109 million Vested (2) (3) ( 2,051,054 ) 42.87 $ 88 million Forfeited (2) ( 475,411 ) 48.24 Balance at December 31, 2020 4,896,990 53.80 Annual grant to eligible employees: Feb. 18, 2021 Performance share units 903,250 59.35 Deferred stock units 550,090 56.13 Additional shares granted (1) 1,163,644 Various 53.76 Total shares granted 2,616,984 56.19 $ 147 million Vested (3) ( 2,459,427 ) 49.59 $ 122 million Forfeited ( 386,501 ) 57.52 Balance at December 31, 2021 4,668,046 57.04 (1) Includes performance share units and deferred stock units. (2) Includes performance share units, deferred stock units and other stock-based awards. (3) The actual tax benefit/(expense) realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled $ 6 million in 2021, $ 5 million in 2020 and $ 2 million in 2019. (4) The grant date fair value of performance share units is determined based on the Monte Carlo simulation model for the market-based total shareholder return component and the closing market price of the Company’s stock on the grant date for performance-based components. The Monte Carlo simulation model incorporates the probability of achieving the total shareholder return market condition. Compensation expense is recognized using the grant date fair values regardless of whether the market condition is achieved, so long as the requisite service has been provided. 117 Table of Contents Note 13. Capital Stock Our amended and restated articles of incorporation authorize 5.0 billion shares of Common Stock and 500 million shares of preferred stock. There were no preferred shares issued and outstanding at December 31, 2021, 2020 and 2019. Shares of Common Stock issued, in treasury and outstanding were: Shares Issued Treasury Shares Shares Outstanding Balance at January 1, 2019 1,996,537,778 ( 545,537,923 ) 1,450,999,855 Shares repurchased — ( 30,902,465 ) ( 30,902,465 ) Exercise of stock options and issuance of other stock awards — 14,908,864 14,908,864 Balance at December 31, 2019 1,996,537,778 ( 561,531,524 ) 1,435,006,254 Shares repurchased — ( 25,071,845 ) ( 25,071,845 ) Exercise of stock options and issuance of other stock awards — 9,239,812 9,239,812 Balance at December 31, 2020 1,996,537,778 ( 577,363,557 ) 1,419,174,221 Shares repurchased — ( 35,384,366 ) ( 35,384,366 ) Exercise of stock options and issuance of other stock awards — 7,840,684 7,840,684 Balance at December 31, 2021 1,996,537,778 ( 604,907,239 ) 1,391,630,539 Stock plan awards to employees and non-employee directors are issued from treasury shares. At December 31, 2021, 77.1 million shares of Common Stock held in treasury were reserved for stock options and other stock awards. Share Repurchase Program: Between 2013 and 2017, our Board of Directors authorized the repurchase of a total of $ 13.7 billion of our Common Stock through December 31, 2018. On January 31, 2018, our Finance Committee, with authorization delegated from our Board of Directors, approved an increase of $ 6.0 billion in the share repurchase program, raising the authorization to $ 19.7 billion of Common Stock repurchases, and extended the program through December 31, 2020 . On December 2, 2020, our Board of Directors approved an increase of $ 4.0 billion in the share repurchase program, raising the authorization to $ 23.7 billion of Common Stock repurchases, and extended the program through December 31, 2023 . Repurchases under the program are determined by management and are wholly discretionary. Prior to January 1, 2021, we had repurchased approximately $ 18.0 billion of Common Stock pursuant to this authorization. During 2021, we repurchased approximately 35.4 million shares of Common Stock at an average cost of $ 59.24 per share, or an aggregate cost of approximately $ 2.1 billion, all of which was paid during the period except for approximately $ 16 million settled in January 2022. All share repurchases were funded through available cash and commercial paper issuances. As of December 31, 2021, we have approximately $ 3.7 billion in remaining share repurchase capacity. 118 Table of Contents Note 14. Commitments and Contingencies Legal Proceedings: We routinely are involved in legal proceedings, claims, disputes, regulatory matters and governmental inspections or investigations arising in the ordinary course of or incidental to our business, including those noted below in this section. We record provisions in the consolidated financial statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. For matters we have not provided for that are reasonably possible to result in an unfavorable outcome, management is unable to estimate the possible loss or range of loss or such amounts have been determined to be immaterial. At present we believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations or cash flows. However, legal proceedings and government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial monetary damages. In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other remedies. An unfavorable outcome might result in a material adverse impact on our business, results of operations or financial position. On April 1, 2015 , the U.S. Commodity Futures Trading Commission (“CFTC”) filed a complaint against Kraft Foods Group and Mondelēz Global LLC (“Mondelēz Global”) in the U.S. District Court for the Northern District of Illinois (the “District Court”), Eastern Division (the “CFTC action”) following its investigation of activities related to the trading of December 2011 wheat futures contracts that occurred prior to the spin-off of Kraft Foods Group. The complaint alleges that Kraft Foods Group and Mondelēz Global (1) manipulated or attempted to manipulate the wheat markets during the fall of 2011; (2) violated position limit levels for wheat futures and (3) engaged in non-competitive trades by trading both sides of exchange-for-physical Chicago Board of Trade wheat contracts. The CFTC seeks civil monetary penalties of either triple the monetary gain for each violation of the Commodity Exchange Act (the “Act”) or $ 1 million for each violation of Section 6(c)(1), 6(c)(3) or 9(a)(2) of the Act and $ 140,000 for each additional violation of the Act, plus post-judgment interest; an order of permanent injunction prohibiting Kraft Foods Group and Mondelēz Global from violating specified provisions of the Act; disgorgement of profits; and costs and fees. On August 15, 2019, the District Court approved a settlement agreement between the CFTC and Mondelēz Global. The terms of the settlement, which are available in the District Court’s docket, had an immaterial impact on our financial position, results of operations and cash flows. On October 23, 2019, following a ruling by the United States Court of Appeals for the Seventh Circuit regarding Mondelēz Global's allegations that the CFTC and its Commissioners violated certain terms of the settlement agreement and the CFTC's argument that the Commissioners were not bound by the terms of the settlement agreement, the District Court vacated the settlement agreement and reinstated all pending motions that the District Court had previously mooted as a result of the settlement. The parties have reached a new agreement in principle to resolve the CFTC action and have submitted the settlement to the District Court for approval. The District Court cancelled a scheduled conference on June 4, 2020 to discuss the proposed settlement agreement but indicated that it would rule on pending motions in due course. Additionally, several class action complaints were filed against Kraft Foods Group and Mondelēz Global in the District Court by investors in wheat futures and options on behalf of themselves and others similarly situated. The complaints make similar allegations as those made in the CFTC action, and the plaintiffs are seeking monetary damages, interest and unjust enrichment; costs and fees; and injunctive, declaratory and other unspecified relief. In June 2015, these suits were consolidated in the District Court. On January 3, 2020, the District Court granted plaintiffs' request to certify a class. It is not possible to predict the outcome of these matters; however, based on our Separation and Distribution Agreement with Kraft Foods Group dated as of September 27, 2012, we expect to bear any monetary penalties or other payments in connection with the CFTC action and the class action. Although the CFTC action and the class action complaints involve the same alleged conduct, a resolution or decision with respect to one of the matters may not be dispositive as to the outcome of the other matter. In November 2019, the European Commission informed us that it has initiated an investigation into our alleged infringement of European Union competition law through certain practices restricting cross-border trade within the European Economic Area. On January 28, 2021, the European Commission announced it has taken the next procedural step in its investigation and opened formal proceedings. We are cooperating with the investigation and expect to continue to engage with the European Commission as its investigation proceeds. It is not possible to predict how long the investigation will take or the ultimate outcome of this matter. 119 Table of Contents Third-Party Guarantees: We enter into third-party guarantees primarily to cover long-term obligations of our vendors. As part of these transactions, we guarantee that third parties will make contractual payments or achieve performance measures. At December 31, 2021, we had no material third-party guarantees recorded on our consolidated balance sheet. Tax Matters: We are a party to various tax matter proceedings incidental to our business. These proceedings are subject to inherent uncertainties, and unfavorable outcomes could subject us to additional tax liabilities and could materially adversely impact our business, results of operations or financial position. During the fourth quarter of 2019, we resolved several indirect tax matters and recorded $ 85 million of net indirect tax expenses within selling, general and administrative expenses. 120 Table of Contents Note 15. Reclassifications from Accumulated Other Comprehensive Income The following table summarizes the changes in the accumulated balances of each component of accumulated other comprehensive earnings/(losses) attributable to Mondelēz International. Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net (gains)/losses of $( 44 ) million in 2021, $ 285 million in 2020 and $ 279 million in 2019. For the Years Ended December 31, 2021 2020 2019 (in millions) Currency Translation Adjustments: Balance at beginning of period $ ( 8,655 ) $ ( 8,320 ) $ ( 8,622 ) Currency translation adjustments ( 481 ) ( 398 ) 251 Reclassification to earnings related to: Equity method investment transactions (1) — 29 — Tax (expense)/benefit 23 47 49 Other comprehensive earnings/(losses) ( 458 ) ( 322 ) 300 Less: other comprehensive (earnings)/loss attributable to noncontrolling interests 16 ( 13 ) 2 Balance at end of period ( 9,097 ) ( 8,655 ) ( 8,320 ) Pension and Other Benefit Plans: Balance at beginning of period $ ( 1,874 ) $ ( 1,721 ) $ ( 1,854 ) Net actuarial gain/(loss) arising during period 398 ( 187 ) 4 Tax (expense)/benefit on net actuarial gain/(loss) ( 80 ) 38 22 Losses/(gains) reclassified into net earnings: Amortization of experience losses and prior service costs (2) 140 104 137 Settlement losses and other expenses (1) 22 22 30 Curtailment credit (2) ( 17 ) — — Tax expense/(benefit) on reclassifications (3) ( 34 ) ( 31 ) ( 42 ) Currency impact 66 ( 99 ) ( 18 ) Other comprehensive earnings/(losses) 495 ( 153 ) 133 Balance at end of period ( 1,379 ) ( 1,874 ) ( 1,721 ) Derivative Cash Flow Hedges: Balance at beginning of period $ ( 161 ) $ ( 213 ) $ ( 168 ) Net derivative gains/(losses) 163 ( 132 ) ( 224 ) Tax (expense)/benefit on net derivative gain/(loss) — 27 19 Losses/(gains) reclassified into net earnings: Interest rate contracts (1) (4) ( 152 ) 189 155 Tax expense/(benefit) on reclassifications (3) ( 3 ) ( 28 ) ( 1 ) Currency impact 5 ( 4 ) 6 Other comprehensive earnings/(losses) 13 52 ( 45 ) Balance at end of period ( 148 ) ( 161 ) ( 213 ) Accumulated other comprehensive income attributable to Mondelēz International: Balance at beginning of period $ ( 10,690 ) $ ( 10,254 ) $ ( 10,644 ) Total other comprehensive earnings/(losses) 50 ( 423 ) 388 Less: other comprehensive (earnings)/loss attributable to noncontrolling interests 16 ( 13 ) 2 Other comprehensive earnings/(losses) attributable to Mondelēz International 66 ( 436 ) 390 Balance at end of period $ ( 10,624 ) $ ( 10,690 ) $ ( 10,254 ) (1) Includes equity method investment transactions recorded within gain/(loss) on equity method investment transactions. (2) These reclassified losses are included in net periodic benefit costs disclosed in Note 11, Benefit Plans . 121 Table of Contents (3) Taxes reclassified to earnings are recorded within the provision for income taxes . (4) These reclassified losses are recorded within interest and other expense, net . Note 16. Income Taxes On August 6, 2019, Switzerland published changes to its Federal tax law in the Official Federal Collection of Laws. On September 27, 2019, the Zurich Canton published their decision on the September 1, 2019 Zurich Canton public vote regarding the Cantonal changes associated with the Swiss Federal tax law change. The intent of these tax law changes was to replace certain preferential tax regimes with a new set of internationally accepted measures that are hereafter referred to as “Swiss tax reform”. Based on these Federal/Cantonal events, it is our position that enactment of Swiss tax reform for U.S. GAAP purposes was met as of September 30, 2019, and we recorded the impacts in the third quarter of 2019. The net impact was a benefit of $ 767 million, which consisted of a $ 769 million reduction in deferred tax expense from an allowed step-up of intangible assets for tax purposes (recorded net of valuation allowance) and remeasurement of our deferred tax balances, partially offset by a $ 2 million indirect tax impact in selling, general and administrative expenses. The ongoing impacts of these Swiss tax reform law changes became effective January 1, 2020. With the acquisition of Chipita in January 2022 (refer to Note 2, Acquisitions and Divestitures ), we believe there is a reasonable possibility that a significant portion of the valuation allowance recorded against the deferred tax asset for the step-up of intangible assets will no longer be needed. The amount of the valuation allowance to be released in 2022 is dependent on the increase in Switzerland's future taxable income. Earnings/(losses) from continuing operations before income taxes and the provision for income taxes consisted of: For the Years Ended December 31, 2021 2020 2019 (in millions) Earnings/(losses) from continuing operations before income taxes: United States $ 519 $ 514 $ 751 Outside United States 3,850 2,869 2,696 $ 4,369 $ 3,383 $ 3,447 Provision for income taxes: United States federal: Current $ 297 $ 440 $ 145 Deferred ( 31 ) ( 82 ) 97 266 358 242 State and local: Current 89 98 29 Deferred 9 ( 7 ) 45 98 91 74 Total United States 364 449 316 Outside United States: Current 599 756 459 Deferred 227 19 ( 773 ) Total outside United States 826 775 ( 314 ) Total provision for income taxes $ 1,190 $ 1,224 $ 2 122 Table of Contents The effective income tax rate on pre-tax earnings differed from the U.S. federal statutory rate as follows: For the Years Ended December 31, 2021 2020 2019 U.S. federal statutory rate 21.0 % 21.0 % 21.0 % Increase/(decrease) resulting from: State and local income taxes, net of federal tax benefit 1.1 % 1.6 % 1.3 % Foreign rate differences ( 1.6 )% 1.1 % 0.2 % Changes in judgment on realizability of deferred tax assets 0.1 % ( 2.2 )% ( 0.3 )% Reversal of other tax accruals no longer required ( 0.5 )% ( 0.8 )% ( 3.0 )% Tax accrual on investment in KDP (including tax impact of share sales) 4.7 % 6.7 % 0.8 % Excess tax benefits from equity compensation ( 0.7 )% ( 1.0 )% ( 1.2 )% Tax legislation (non-Swiss tax reform) 2.3 % 1.0 % 0.4 % Swiss tax reform — — ( 22.3 )% Business sales (including tax impact from JDE Peet's transaction) — 7.4 % — Foreign tax provisions under TCJA (GILTI, FDII and BEAT) (1) 0.8 % 1.1 % 2.5 % Other — 0.3 % 0.7 % Effective tax rate 27.2 % 36.2 % 0.1 % (1) The Tax Cuts and Jobs Act of 2017 (“TCJA”) established the Global Intangible Low-Tax Income (“GILTI”) provision, which taxes U.S. allocated expenses and certain income from foreign operations; the Foreign-Derived Intangible Income (“FDII”) provision, which allows a deduction against certain types of U.S. taxable income resulting in a lower effective U.S. tax rate on such income; and the Base Erosion Anti-abuse Tax (“BEAT”), which is a minimum tax based on cross-border service payments by U.S. entities. Our 2021 effective tax rate of 27.2 % was high due to the $ 187 million net tax expense incurred in connection with the KDP share sales during the second and third quarters. Excluding this impact, our effective tax rate was 23.0 %, which reflects unfavorable provisions from the 2017 U.S. tax reform and taxes on earnings from equity method investments (these earnings are reported separately on our consolidated statements of earnings and not within earnings before income taxes), largely offset by favorable impacts from the mix of pre-tax income in various non-U.S. jurisdictions. The 23.0 % includes a discrete net tax benefit of $ 2 million, primarily driven by a $ 47 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions and a $ 44 million benefit from two U.S. tax returns amended to reflect new guidance from the U.S. Treasury Department, offset by $ 100 million net tax expense from the increase of our deferred tax liabilities resulting from enacted tax legislation (mainly in the United Kingdom). Our 2020 effective tax rate of 36.2 % was high due to the $ 452 million net tax expense incurred in connection with the JDE Peet's transaction and four KDP share sales that occurred during 2020 (the related gains were reported as gains on equity method investments). Excluding these impacts, our effective tax rate was 22.8 %, which reflects unfavorable provisions from U.S. tax reform and taxes on earnings from equity method investments (these earnings are reported separately on our consolidated statements of earnings and not within earnings before income taxes), largely offset by favorable impacts from the mix of pre-tax income in various non-U.S. jurisdictions and discrete net tax benefits of $ 119 million. The discrete net benefits were primarily driven by the $ 70 million net benefit from the release of the China valuation allowance and a $ 50 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions. Our 2019 effective tax rate of 0.1 % was significantly impacted by the $ 769 million net deferred tax benefit related to Swiss tax reform in the third quarter of 2019. Excluding this impact, our 2019 effective tax rate was 22.4 %, which reflects unfavorable provisions from U.S. tax reform and taxes on earnings from equity method investments (these earnings are reported separately on our consolidated statements of earnings and not within earnings before income taxes), largely offset by favorable impacts from the mix of pre-tax income in various non-U.S. jurisdictions and discrete net tax benefits of $ 176 million. The discrete net tax benefits were primarily driven by a $ 128 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions. 123 Table of Contents Tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of: As of December 31, 2021 2020 (in millions) Deferred income tax assets: Accrued postretirement and postemployment benefits $ 114 $ 137 Accrued pension costs 23 251 Other employee benefits 150 151 Accrued expenses 454 420 Loss carryforwards 685 648 Tax credit carryforwards 786 790 Other 468 535 Total deferred income tax assets 2,680 2,932 Valuation allowance ( 1,280 ) ( 1,277 ) Net deferred income tax assets $ 1,400 $ 1,655 Deferred income tax liabilities: Intangible assets, including impact from Swiss tax reform $ ( 3,214 ) $ ( 2,951 ) Property, plant and equipment ( 638 ) ( 747 ) Other ( 451 ) ( 513 ) Total deferred income tax liabilities ( 4,303 ) ( 4,211 ) Net deferred income tax liabilities $ ( 2,903 ) $ ( 2,556 ) Our significant valuation allowances are in the U.S. and Switzerland. The U.S. valuation allowance mainly relates to excess foreign tax credits generated by the deemed repatriation under U.S. tax reform while the Swiss valuation allowance brings the allowed step-up of intangible assets recorded under Swiss tax reform to the amount more likely than not to be realized. At December 31, 2021, the Company has pre-tax loss carryforwards of $ 2,935 million, of which $ 171 million will expire at various dates between 2022 and 2041 and the remaining $ 2,764 million can be carried forward indefinitely. The unremitted earnings as of December 31, 2021 in those subsidiaries where we continue to be indefinitely reinvested is approximately $ 1.7 billion. We currently have not recognized approximately $ 121 million of deferred tax liabilities related to those unremitted earnings. Future tax law changes or changes in the needs of our non-U.S. subsidiaries could require us to recognize deferred tax liabilities on a portion, or all, of our accumulated earnings that are currently indefinitely reinvested. The changes in our unrecognized tax benefits were: For the Years Ended December 31, 2021 2020 2019 (in millions) January 1 $ 442 $ 426 $ 516 Increases from positions taken during prior periods 31 35 27 Decreases from positions taken during prior periods ( 21 ) ( 17 ) ( 35 ) Increases from positions taken during the current period 47 48 50 Decreases relating to settlements with taxing authorities ( 13 ) ( 27 ) ( 64 ) Reductions resulting from the lapse of the applicable statute of limitations ( 26 ) ( 29 ) ( 64 ) Currency/other ( 14 ) 6 ( 4 ) December 31 $ 446 $ 442 $ 426 124 Table of Contents As of January 1, 2021, our unrecognized tax benefits were $ 442 million. If we had recognized all of these benefits, the net impact on our income tax provision would have been $ 369 million. Our unrecognized tax benefits were $ 446 million at December 31, 2021, and if we had recognized all of these benefits, the net impact on our income tax provision would have been $ 372 million. Within the next 12 months, our unrecognized tax benefits could increase by approximately $ 35 million due to unfavorable audit developments or decrease by approximately $ 65 million due to audit settlements and the expiration of statutes of limitations in various jurisdictions. We include accrued interest and penalties related to uncertain tax positions in our tax provision. We had accrued interest and penalties of $ 170 million as of January 1, 2021 and $ 173 million as of December 31, 2021. Our 2021 provision for income taxes included $ 11 million expense for interest and penalties. In connection with the 2017 enacted U.S. tax reform, we recorded a $ 1.3 billion transition tax liability that is payable in installments through 2026. As of December 31, 2021, the remaining liability was approximately $ 720 million. Our income tax filings are regularly examined by federal, state and non-U.S. tax authorities. U.S. federal, state and non-U.S. jurisdictions have statutes of limitations generally ranging from three to five years; however, these statutes are often extended by mutual agreement with the tax authorities. The earliest year still open to examination by U.S. federal and state tax authorities is 2016 and years still open to examination by non-U.S. tax authorities in major jurisdictions include (earliest open tax year in parentheses): China (2011), France (2015), India (2005), the United Kingdom (2015) and Switzerland (2016). Note 17. Earnings per Share Basic and diluted earnings per share (“EPS”) were calculated as follows: For the Years Ended December 31, 2021 2020 2019 (in millions, except per share data) Net earnings $ 4,314 $ 3,569 $ 3,944 Noncontrolling interest earnings ( 14 ) ( 14 ) ( 15 ) Net earnings attributable to Mondelēz International $ 4,300 $ 3,555 $ 3,929 Weighted-average shares for basic EPS 1,403 1,431 1,445 Plus incremental shares from assumed conversions of stock options and long-term incentive plan shares 10 10 13 Weighted-average shares for diluted EPS 1,413 1,441 1,458 Basic earnings per share attributable to Mondelēz International $ 3.06 $ 2.48 $ 2.72 Diluted earnings per share attributable to Mondelēz International $ 3.04 $ 2.47 $ 2.69 We exclude antidilutive Mondelēz International stock options from our calculation of weighted-average shares for diluted EPS. We excluded antidilutive stock options and long-term incentive plan shares of 3.1 million for the year ended December 31, 2021, 3.6 million for the year ended December 31, 2020 and 5.2 million for the year ended December 31, 2019. Note 18. Segment Reporting We manufacture and market primarily snack food products, including biscuits (cookies, crackers and salted snacks), chocolate, gum & candy and various cheese & grocery products, as well as powdered beverage products. We manage our global business and report operating results through geographic units. We manage our operations by region to leverage regional operating scale, manage different and changing business environments more effectively and pursue growth opportunities as they arise across our key markets. Our regional management teams have responsibility for the business, product categories and financial results in the regions. 125 Table of Contents Our operations and management structure are organized into four operating segments: • Latin America • AMEA • Europe • North America We use segment operating income to evaluate segment performance and allocate resources. We believe it is appropriate to disclose this measure to help investors analyze segment performance and trends. Segment operating income excludes unrealized gains and losses on hedging activities (which are a component of cost of sales), general corporate expenses (which are a component of selling, general and administrative expenses), amortization of intangible assets, gains and losses on divestitures and acquisitions and acquisition-related costs (which are a component of selling, general and administrative expenses) in all periods presented. We exclude these items from segment operating income in order to provide better transparency of our segment operating results. Furthermore, we centrally manage benefit plan non-service income and interest and other expense, net. Accordingly, we do not present these items by segment because they are excluded from the segment profitability measure that management reviews. Our segment net revenues and earnings, reflecting our current segment structure for all periods presented, were: For the Years Ended December 31, 2021 2020 2019 (in millions) Net revenues: Latin America $ 2,797 $ 2,477 $ 3,018 AMEA 6,465 5,740 5,770 Europe 11,156 10,207 9,972 North America 8,302 8,157 7,108 Net revenues $ 28,720 $ 26,581 $ 25,868 Earnings before income taxes: Operating income: Latin America $ 261 $ 189 $ 341 AMEA 1,054 821 691 Europe 2,092 1,775 1,732 North America 1,371 1,587 1,451 Unrealized gains/(losses) on hedging activities (mark-to-market impacts) 279 16 91 General corporate expenses ( 253 ) ( 326 ) ( 330 ) Amortization of intangible assets ( 134 ) ( 194 ) ( 174 ) Net gain on acquisition and divestitures 8 — 44 Acquisition-related costs ( 25 ) ( 15 ) ( 3 ) Operating income 4,653 3,853 3,843 Benefit plan non-service income 163 138 60 Interest and other expense, net ( 447 ) ( 608 ) ( 456 ) Earnings before income taxes $ 4,369 $ 3,383 $ 3,447 No single customer accounted for 10% or more of our net revenues from continuing operations in 2021 . Our five largest customers accounted for 16.7 % and our ten largest customers accounted for 23.0 % of net revenues from continuing operations in 2021. Items impacting our segment operating results are discussed in Note 1, Summary of Significant Accounting Policies , Note 2, Acquisitions and Divestitures, Note 4, Property, Plant and Equipment, Note 6, Goodwill and Intangible Assets, Note 8, Restructuring Program , and Note 14, Commitments and Contingencies . Also see Note 9, Debt and Borrowing Arrangements , and Note 10, Financial Instruments, for more information on our interest and other expense, net for each period. 126 Table of Contents Total assets, depreciation expense and capital expenditures by segment, reflecting our current segment structure for all periods presented, were: For the Years Ended December 31, 2021 2020 2019 (in millions) Total assets: Latin America (1) $ 4,106 $ 4,181 $ 4,716 AMEA (1) 10,386 9,997 9,740 Europe (1) 20,927 21,442 20,354 North America (1) 23,321 23,297 21,637 Equity method investments 5,289 6,036 7,178 Unallocated assets and adjustments (2) 3,063 2,857 890 Total assets $ 67,092 $ 67,810 $ 64,515 (1) Segment assets do not reflect outstanding intercompany asset balances that have been eliminated at a segment level. (2) Unallocated assets consist primarily of cash and cash equivalents, deferred income taxes, centrally held property, plant and equipment, prepaid pension assets and derivative financial instrument balances. Final adjustments for jurisdictional netting of deferred tax assets and liabilities is done at a consolidated level. For the Years Ended December 31, 2021 2020 2019 (in millions) Depreciation expense (1) : Latin America $ 105 $ 101 $ 105 AMEA 173 159 164 Europe 257 238 238 North America 148 154 138 Total depreciation expense $ 683 $ 652 $ 645 (1) Includes depreciation expense related to owned property, plant and equipment. Does not include amortization of intangible assets or leased assets. Refer to the consolidated statement of cash flows for total depreciation and amortization expenses. For the Years Ended December 31, 2021 2020 2019 (in millions) Capital expenditures: Latin America $ 165 $ 219 $ 197 AMEA 208 177 244 Europe 409 295 297 North America 183 172 187 Total capital expenditures $ 965 $ 863 $ 925 127 Table of Contents Geographic data for net revenues (recognized in the countries where products are sold from) and long-lived assets, excluding deferred taxes, goodwill, intangible assets and equity method investments, were: For the Years Ended December 31, 2021 2020 2019 (in millions) Net revenues: United States $ 7,146 $ 7,130 $ 6,625 Other 21,574 19,451 19,243 Total net revenues $ 28,720 $ 26,581 $ 25,868 As of December 31, 2021 2020 2019 (in millions) Long-lived assets: United States $ 1,851 $ 1,956 $ 1,806 United Kingdom 1,125 888 843 Other 7,675 7,784 7,527 Total long-lived assets $ 10,651 $ 10,628 $ 10,176 No individual country within Other exceeded 10% of our net revenues or long-lived assets for all periods presented. Net revenues by product category, reflecting our current segment structure for all periods presented, were: For the Year Ended December 31, 2021 Latin America AMEA Europe North America Total (in millions) Biscuits $ 798 $ 2,253 $ 3,328 $ 7,145 $ 13,524 Chocolate 759 2,396 5,862 282 9,299 Gum & Candy 567 816 614 875 2,872 Beverages 359 550 126 — 1,035 Cheese & Grocery 314 450 1,226 — 1,990 Total net revenues $ 2,797 $ 6,465 $ 11,156 $ 8,302 $ 28,720 For the Year Ended December 31, 2020 Latin America AMEA Europe North America Total (in millions) Biscuits $ 668 $ 2,039 $ 3,035 $ 7,024 $ 12,766 Chocolate 610 2,025 5,291 253 8,179 Gum & Candy 474 696 612 880 2,662 Beverages 403 544 102 — 1,049 Cheese & Grocery 322 436 1,167 — 1,925 Total net revenues $ 2,477 $ 5,740 $ 10,207 $ 8,157 $ 26,581 128 Table of Contents For the Year Ended December 31, 2019 Latin America AMEA Europe North America Total (in millions) Biscuits $ 708 $ 1,844 $ 2,998 $ 5,888 $ 11,438 Chocolate 710 2,082 5,119 247 8,158 Gum & Candy 823 861 698 973 3,355 Beverages 452 546 97 — 1,095 Cheese & Grocery 325 437 1,060 — 1,822 Total net revenues $ 3,018 $ 5,770 $ 9,972 $ 7,108 $ 25,868 129 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.